Key Information regarding PCP(Personal Contract Purchase)
All Vehicle Contracts Limited may also be referred to herein as ‘We’ ‘Company’ ‘AVC’ ‘Us’ ‘Our’ and ‘All Vehicle Contracts’.
Customers and potential Customers may also be referred to herein as ’You’, ‘Your’ and ‘Clients’.
This page will provide You with the facts, offering summarised information and guidance on PCP Personal Contract Purchase, as funding method for Your chosen vehicle. PCP Personal Contract Purchase
Vehicle Insurance and PCP (Personal Contract Purchase)
As with any contract or finance agreement, You are required to maintain a fully comprehensive insurance policy for the duration of the agreement.
What is a PCP?
PCP stands for Personal Contract Purchase, which essentially is a form of Hire Purchase. The key differential of this compared to hire purchase is that a proportion of the vehicles value is assessed at the start of the agreement and deferred, until the end of the agreement, resulting in lower monthly repayments.
You’re Options under a PCP Agreement
Option to purchase, unlike Personal Contract Hire, PCPs provide the flexibility and the option for you to own the car at the end of the agreement by paying the deferred value known as the GFV (Guaranteed Future Value)
Do I own the vehicle at the end of the PCP agreement?
You can only own the vehicle at the end of a PCP agreement by paying the GFV (Guaranteed Future Value) this offers a lower monthly payment than conventional hire purchase. If you wish to take ownership without paying the (Guaranteed Future Value) then PCP is not suitable for your requirements, and you should consider alternative options.
You are entitled to equity return on any profit built up over the course of the existing agreement, or over and above the GFV (Guaranteed Future Value)
You have the option to simply hand the car back, should the vehicles value be below the GFV (Guaranteed Future Value).
You can arrange to sell or part exchange the vehicle at the close of your contract, and any figure gained over and above the guaranteed future value will be yours to put towards your next car. This may assist you when entering into a new agreement without recourse to your own funds.
Risks not understanding vehicle return obligations
If you choose to return your vehicle due to the vehicles value not covering the Guaranteed Minimum Future Value (GMFV), you have an obligation to make the vehicle available for inspection, please refer to our PCP Vehicle return guide for further information.
Return vehicle obligations
Should the vehicles value fall to less than that of Guaranteed Minimum Future Value (GMFV), leading you to returning the vehicle it is wise to check that you understand the terms and conditions of returning your vehicle, which must be serviced as per manufacturer's recomendations, and in good all round condition with the exception of what is deemed as fair wear. To find out more please refer to our PCP fair wear and wear guide for further information.
Risks excess mileage
If you choose to return your vehicle due to the vehicles value falling to less than that of Guaranteed Minimum Future Value (GMFV), this could be that the shortfall is due to you covering more than the contracted annual mileage. It is wise to check that mileage is suitable for your requirements before completing your agreement, this will avoid unforeseen cost in excess mileage charges should you need to return the vehicle at the close of the PCP agreement.
Personal Contract Purchase including Maintenance
Fully maintained contracts that cover the cost of regular services, maintenance and tyres within your agreement, subject to fair Wear and tear. If You haven’t opted for inclusive service and maintenance, You still have the option to include this service prior to finalising Your agreement. AVC can quote and arrange this for you if required.
These clauses have no relevance if you choose to purchase your vehicle for the GFV (Guaranteed Future Value) or arrange your own sale, for or for more the GVV or as in most instances part exchange your vehicle for more than GFV and take out a new agreement .
PCP agreements signed on trade premises
Personal Contract Purchase agreements can be agreed face to face, on-line or by phone and signed on dealer trade premises (some finance companies insist agreements signed on trade premises only) cancelation rights or 14 day cooling off period do not apply if your agreement is signed on trade premises.
Cancellation Distance Marketing
You will have the right to cancel or withdraw from the personal contract purchase agreement for a period of 14 days, relating to Distance Marketing Regulations 2004. This act regulates distance selling that is not face to face and not conducted on trade premises.
Personal Contract Purchase agreements can be agreed on-line or by phone with agreements sent electronically (some finance companies insist by post for customer approval).
The 14 day cooling off period begins the day after the agreement is made, being determined by the date on which the Finance company sign it, not the date you sign.
Exercising your cancellation can be actioned by writing to the finance company within the 14 day cooling off period, stating that you wish to cancel the agreement.
If you exercise your right to cancel, you will be entitled to be returned any money paid to it by you (or by any person on your behalf) less a charge for any service provided to you under this agreement as to your instructions or request, prior to the expiry of the cancellation period.
If you do not exercise your right to cancel during the cancellation period, this agreement will remain in full force and effect and its terms and conditions will bind you.
Some diesel vehicles require the addition of ‘AdBlue’ to better manage the vehicle’s emissions. you are responsible for purchasing and maintaining levels of ‘AdBlue’, oil and other vehicle consumables.
Since 2009, diesel particulate filters have been present in the exhaust to reduce pollution and stop soot passing into the atmosphere. Find out more and see if this to see if vehicles fitted with diesel particulate filters are suitable for Your requirements with our Guide to Diesel-Particulate Filter (DPF).
If You have opted for a contract over 3 years in duration, You should ensure that Your vehicle is booked in for an M.O.T. and that the test is carried out successfully.
What happens if I want to hand my PCP vehicle back early?
The agreement will either be Regulated or Unregulated under the Consumer Credit Act, and your rights are unaffected. Early settlement terms and conditions are detailed on the agreement, the early settlement calculations are calculated by the relevant finance company that refer to Rule 78, commonly used by most finance companies.
If you return and the vehicle early and the vehicles value does not cover the Guaranteed Minimum Future Value (GMFV) or the finance company's settlement figure you may be responsible for the shortfall, If you return the vehicle over the terms of your mileage agreement there will be an excess mileage charge, that is aggregated and calculated accordingly; if you are under the mileage, there is no refund.
If you return the vehicle back early or the Guaranteed Minimum Future Value (GMFV) does not cover the future value, you have an obligation to make the vehicle available for inspection, please refer to our PCP Vehicle Return Guide for further information.
To avoid unexpected costs it is wise to check that you understand the terms and conditions of returning your vehicle, and the good all round condition that it should be returned in, with the exception of what is deemed as fair wear. To find out more please refer to our PCP Vehicle return guide for further information.
What happens if I want to end the Personal Contract Purchase agreement?
The agreement will either be Regulated or Unregulated under the Consumer Credit Act, and your rights are unaffected. Early settlement terms and conditions are detailed on the agreement, the early settlement calculations are calculated by the relevant finance company that refer to Rule 78, Consumer Credit Act 1974 used by most finance companies.
You may settle the agreement at any time if a balance is outstanding, including the GMFV payable to the lender. The lender may allow the customer a rebate of the interest remaining on the agreement. However, if the agreement is regulated under the Consumer Credit Act, the minimum amount of rebate is laid down by law.