PCP Simply explained
What is it?
Similar to a Conditional Sale agreement but with additional flexibility since part of the cost is deferred until the end of the agreement which may give you the benefit of lower monthly payments. The deferred amount is known as the Guaranteed Future Value (GFV) sometimes known as Optional Final Payment.
At the end of the agreement you have three options:
1. Retain the car – Simply pay the Guaranteed Future Value, and the car is yours.
2. Renew the car – Choose another car, using any excess part exchange value that is above the Guaranteed Future Value towards your deposit.
3. Return the car – There’s nothing more to pay if the car is in good condition and within the agreed mileage terms.
This short video provides a simple explanation of Personal Contract Purchase and how it works.
Features and Benefits
- A guaranteed fixed monthly payment, allowing you to budget with confidence
- Potentially lower payments than a Conditional Sale agreement
- Variety of options available at the end of the agreement
- You can match the length of your agreement with the time you want to keep the vehicle.
How does it work?
- The dealer will agree with you an estimated annual mileage and this will be used to determine the car’s Guaranteed Future Value (GFV)
- You agree on the amount of deposit, and this figure combined with the agreement duration and GFV will determine the amount of your monthly payment
- You sign the agreement, pay the deposit and then make the monthly payments
- The interest rate is fixed which means you’ll know exactly how much you will repay throughout the term of the agreement
- At the end of the agreement, we’ll write to remind you of the three available options
- You decide which option is best for you. Your dealer may be able to help if you decide to part exchange the car.
Frequently Asked Questions
We understand that you will have many questions when financing a quality used car. We want to ensure that you have all the information possible to ensure you’re fully informed when purchasing with Pro Sports Cars. Please see below frequently asked questions from our valued customers who have asked our Sales Advisors when purchasing their quality used car. If your enquiry is not listed, please call the office on 01482 324280 and one of our friendly Sales Advisors will be happy to assist you further with your questions.
What is a balloon payment?
A balloon payment is a lump sum owed to the lender at the end of a loan term after all regular monthly repayments have been made. This allows you to repay only part of the principal of your loan over its term, reducing your monthly repayments in exchange for owing the lender a lump sum at the end of the loan term.
What happens at the end of my loan term?
Where you have elected to add a balloon payment to your loan, it must be paid as a single lump sum at the end of the loan’s term.
However, there are generally a few options available when the balloon payment loan is due:
If you’re keeping your car – If you want to keep the vehicle you can just pay the balloon payment and finalise the loan. It can either be paid in cash or, subject to approval, you can refinance or “rollover” your balloon payment into a new loan (essentially, continuing your current loan to cover the balloon).
If you’re after a new car – If you want to change vehicles you can sell your current vehicle and use the sale proceeds to pay back the balloon payment and finalise your loan. You can then purchase a replacement vehicle, and, if you’d like, apply for a new loan to fund the replacement vehicle’s purchase. If you’re trading in your current vehicle as part of buying your new vehicle then paying off the balloon can usually be structured into the change-over process, which will be simpler for you.
Yes. We offer all our customers a range of finance options. Please speak to one of our Sales Advisors for more information.
Yes, we offer HP finance options to our customers. For more information on HP, please see below ‘What is HP?’.
Yes, we offer PCP finance options to our customers. For more information on PCP, please see below ‘What is PCP?’.
Yes. We can add any negative equity to a new deal spread over a 48 month agreement.
If you choose to pay for your car with a Hire Purchase (HP) agreement, you will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the HP agreement ends and you own the car. Once you’ve made your final monthly payment, including the option to purchase fee, you’ll have full ownership of the car. Monthly payments may be higher than some other finance options, such as PCP, as you’re paying off the full value of the car. Please note, you won’t own the car until you have made all of your repayments and, you won’t be able to sell the car without settling the finance. If you have any further questions, please speak to one of our friendly Sales Advisors.
PCP (Personal Contract Purchase) is ideal for people who want lower monthly repayments and prefer to change cars on a regular basis. PCP is a variation of a Hire Purchase agreement. The key difference is that the value of the car at the end of the contract is calculated at the start of the agreement and this value is deferred. This deferred sum is usually referred to as the Guaranteed Minimum Future Value (GMFV) and is based on a number of factors including how old the car will be at the end of the agreement and how many miles it is expected to have covered. Deferring the GMFV to the end of the agreement in this way means that your regular monthly payments are lower than those on a comparable HP agreement over the same term.
A PCP agreement also gives you the flexibility to decide whether you would like to own the car outright at the end of the agreement by paying the deferred value (GMFV), or returning the car to the lender and entering into a new car finance agreement.
If you have any further questions, please speak to one of our friendly Sales Advisors.
Yes. Please speak to your Sales Advisor about how much you would like to deposit and they will work out your monthly repayments.
Yes, you can apply with our lenders even if you are self-employed, we would need to have your current bank statements to prove your income.
Your APR rate may be higher than the advertised 5.9%. If you have been declined in the last 12 months for credit, we would advise you not to apply as this will affect your credit rating.
We perform a hard credit check when customers apply for finance. When we check your finance against your application, please note that this does affect your credit score.