What are the benefits of PCP?
PCP deals are not only flexible, but they can be a lot more convenient than a standard bank loan. By choosing PCP you will normally benefit from receiving an instant lending decision in the majority of cases. The application process is shorter, faster and less intrusive with a higher application acceptance level when compared to unsecured lending.
A PCP contract is usually set from two to four years, giving you the flexibility to decide how long you would like to keep the car before you change it. When you reach the end of the contract you have three options:
Pay the guaranteed future value and option to purchase fee - and then the car is yours
Give the car back with nothing to pay (subject to mileage and fair wear and tear)
Part Exchange your car and use any equity available (if applicable) as a deposit on your next new car
The recommended deposit amount for PCP deals are often set around 10% of the car's value. This will give you a good balance between your initial outlay of money and the subsequent monthly costs. It may also be possible to reduce your deposit down to almost zero, depending on the car. However, this will mean that your monthly payments are higher.
What else do I need to know?
Should you decide to take out a PCP contract, you should be aware of the following:
At the beginning of the agreement, you decide on the total mileage you expect to do. It is normal to pay a fixed amount for every additional mile over this agreed amount, so bear this in mind if you hand your vehicle back at the end of your contract.
Wear & Tear
It is in your interest to minimize the vehicle’s ‘wear and tear’ and not exceed the agreed mileage. In simple terms ‘normal wear and tear’ means that for its age and mileage, the vehicle is in fair working order, condition and repair.