Personal Contract Purchase (PCP)
This type of agreement is effectively a finance agreement that offers more affordable, lower monthly payments compared to that of normal hire purchase. The agreement will either be Regulated or Unregulated under the Consumer Credit Act.
Affordable, lower monthly payments are achieved by financing the vehicle and deferring the predicted minimum future value or deprecation element of the vehicle as one payment payable at the end of the term. This payment is usually referred to as a Guaranteed Minimum Future Value (GMFV), balloon payment or option to purchase.
To make life as simple as possible, the All Vehicle Contracts website helps you choose and compare which vehicle and lease purchase or hire purchase agreement is right for you. Interactive quotation options and full vehicle comparisons, on virtually any make, model or manufacturer, are available for you to explore and compare online.
PCP is one of the most popular forms of vehicle financing and it is normally a fixed cost, fixed period loan of money that is linked (or secured) to the purchase of a vehicle.
Acquiring a new vehicle on PCP (Personal Contract Purchase) often works out far more cost effective than financing older or dated vehicles. By taking advantage of the latest new vehicle technology and more affordable lower monthly payments, you will be surprised at the savings you can make and could be driving a new car for a lot less than you think.
Although PCP can be referred to by other names, the principal and key features are all the same. PCP is also known as Personal Contract Plan. Finance companies and manufacturers brand this type of agreement with different names for example:
Toyota refer to PCP as Access while Ford refer to it as Ford Options. Peugeot call it Passport Personal Lease and Audi, VW, Seat and Skoda all use Solutions. Other manufacturer PCP names include Renault Selections, BMW Select, Mini Select, Mercedes-Benz Agility, Smart Agility, Jaguar Privilege, Mitsubishi Alternatives, Citroen Elect 3, Volvo Advantage, Fiat i-deal, Chrysler Horizon, Alfa Romeo Preferenza, Jeep Horizon, Kia Access, Nissan Preferences, Lexus Connect, Vauxhall – Flexible PCP, Porsche Solutions, Infiniti Selectiviti, and Land Rover Freedom.
To make life as simple as possible, All Vehicle Contracts refer to PCP as Personal Contract Purchase and have optimized our website to help you choose and compare which vehicle and Personal Contract Purchase deal is right for you. Interactive quotation options and full vehicle comparisons, including whole life costs on virtually any make, model or manufacturer, are available for you to explore and compare on line.
Personal Contract Purchase is exactly what the name suggests; it is an agreement that is tailor made to your chosen vehicle over a fixed term and to the annual mileage that suits your requirements.
Personal Contract Plans include predicted minimum future value of the vehicle as one payment payable at end of the term usually referred to as a Guaranteed Minimum Future Value (GMFV), balloon payment or option to purchase.
The Guaranteed Minimum Future Value (GMFV) allows more affordable lower monthly payments compared to that of normal Hire Purchase Agreements and will either be Regulated or Unregulated under the Consumer Credit Act.
Arrange to sell or part exchange the vehicle at the close of your contract, and the figure gained over and above the guaranteed future value will be yours to put towards your next car that may assist you in entering into an agreement for your new car without recourse to your own funds.
Purchase the vehicle at the close of your contract for the Guaranteed Minimum Future Value (GMFV) - this may attract an option to purchase fee; if applicable, it will be documented on your agreement.
Guaranteed Minimum Future Value (GMFV) is a conservative estimation and is usually set to be below the anticipated vehicle resale value from the outset. This is set and guaranteed by the manufacturer or finance company and allows the customer to know the least amount the guarantee will be worth at a point in the future.
Personal Contract Plans are usually set for periods of between 24-48 months, and in some cases 60 months; short period contracts are not available.
Personal Contract Purchase - what is the typical initial payment?
Personal Contract Plan initial payments can be without deposit contribution or a deposit to suit your requirements. Of course, the higher the initial payment, the lower the monthly payment; therefore it is important to check advertised prices and compare like for like initial payments when making comparisons.
Personal payment profiles consist of an initial or no initial payment, and monthly payments for the total months, and usually work as follows.
Example 36 Months -
Initial or no initial payment followed 36 payments with the Guaranteed Minimum Future Value (GMFV) payment counted as 36 Payments.
Initial or no initial payment followed 36 payments with the Guaranteed Minimum Future Value (GMFV) payment counted as 37 Payments.
Documentation fees charged by the finance company are usually payable by direct debit on signing or collected at the same time as the first monthly payment, usually on a common monthly date (e.g. one month after signing); information is detailed on the final documentation.
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. Of course, it is impossible to return a vehicle without acceptable fair wear and tear such as small stone chips, and light scratches.
Please click the following links that refer to fair wear and tear guide, and vehicle hand-back procedures.
If you return the vehicle over the terms of a contract purchase agreement there will be an excess mileage clause, which documents excess mileage from the outset; this is charged at pence per mile.
If you settle the agreement early, mileage is aggregated and calculated accordingly; if you go under the mileage, there is no refund.
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 the rule 78, commonly used by most finance companies.
You may settle the agreement at any time if balance is outstanding, including the GMFV paid 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.
You have an obligation to make the vehicle available for inspection. Of course, it is impossible to return a vehicle without acceptable fair wear and tear such as small stone chips, and light scratches. Please click the following links that refer to fair wear and tear guide, and vehicle hand-back procedures.
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