What Is a PCP Car Loan?
Personal Contract Purchase
Personal Contract Purchase car loans are ideal for people who like to change their car on a regular basis and don’t want their payment too high. It is based on a hire purchase agreement but with a final payment deferred until the end.
At the Car Loan Warehouse we offer a variety of PCP car finance options to suit all needs. So regardless of your financial situation, our experts should be able to help. Give us a call on 0800 066 2888 to talk about your options, or apply today for a free, no obligation decision.
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How does PCP car finance work?
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Things to remember about PCP agreements:
Setting your estimated annual mileage carefully as setting this low will give you a lower monthly payment but your GMFV will be higher and if you try to give the car back at the end there will be a pence per mile penalty for every mile over the agreed total mileage. If you try and return the car with any damage you will be charged for the repairs so make sure you give it a good clean and polish and touch up any small scratches with a paint pen. Putting down a large deposit at the beginning may get you a lower payment but the GMFV will be exactly the same as if you put down no deposit so you are not guaranteed to get an equivalent amount of equity out at the end. This means you may have to put your hand in your pocket for more deposit when you come to change for a newer car if you want a similar monthly payment to what you have been used to. So in summary taking a PCP car loan and deferring the GMFV to the end of the term will get you lower monthly payments than an equivalent term hire purchase agreement. You will have fixed monthly payments enabling you to budget your finances easily and you won’t need a large deposit at the beginning unless you want to lower your monthly payment. Similar to hire purchase your agreement is regulated under consumer law so you also get certain legal rights and protections that you wouldn’t get with a bank loan.