PCP is the most popular finance agreement for consumers wishing to change their car between 2 and 4 years.

Similar to an HP agreement, PCP consists of paying an initial deposit, followed by monthly payments.

PCP differs from HP as the monthly payments only pay for the depreciation of the car, whereas with HP the monthly payment pays towards the ownership of the car.

How Does PCP Work?

  1. Deposit & Payment
    1. Tailored to individual requirements
  2. Annual Mileage
    1. Tailored to individual requirements
  3. Guaranteed Minimum Future Value (GMFV)
    1. Also known as the balloon payment, this is the expected value of the car at the end of the agreement

Options at the End of the Agreement

  1. Own the car outright – by paying the balloon payment
  2. End the agreement – by handing the car back to the finance company
  3. Part Exchange the vehicle for another car

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  • Low initial deposit
  • Low monthly payments
  • Flexible options at the end of the agreement
  • A specified Guaranteed Minimum Future Value (GMFV), therefore protecting you from market fluctuations
  • Ability to change car more regularly – every 2 years


  • If you exceed the anticipated annual mileage there may be an excess mileage charge at the end of the contract
  • The loan is secured against the vehicle as such if you miss payments then the vehicle may be repossessed

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Personal Contract Purchase (PCP) example

Example costs for buying a vehicle through Personal Contract Purchase. These examples are based on CarMoney rates as of June 2021. 

Representative example:

  • Monthly Payment: £283
  • Deposit: £1098
  • Term (Months): 48
  • Balance to Finance: £16,000
  • Annual Mileage: 8000
  • Final Payment: £6,424
  • Total Amount Payable: £21,104
  • APR: 8.9%

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