Personal Contract Purchase (PCP) car finance

What is PCP Finance?

PCP (Personal Contract Purchase) is a flexible type of car finance that helps you spread the cost of a car with lower monthly payments. You don’t cover the full cost of the car during the term. Instead, you pay for how much it’s expected to lose in value—plus interest.

You agree on a finance term, deposit amount, mileage limit, and monthly repayments. At the end of your PCP finance, you can:

• Buy the car by paying the final balloon payment
• Hand it back with nothing more to pay (if it’s within the mileage limit and in fair condition)
• Part exchange it and use any positive equity towards your next car

This option suits you if you like to change cars regularly, want to keep monthly payments low, or don’t need to own the car at the end. You decide what happens when the contract ends. If the car’s market value is higher than the GMFV (guaranteed minimum future value), you keep the difference.

Compare PCP finance with other options

Finance features:	Hire purchase (HP)	Personal contract purchase (PCP)	Personal loan
Requires initial deposit	Optional	Optional
Car is yours at the end of the agreement		Optional
Fixed monthly payments
Optional balloon (final) payment
Avoid excess mileage charge
Secured against an asset (e.g. a car)
Support with vehicle issues

PCP vs. Other Finance Options

Still deciding if PCP is the right car finance for you? Here's what you need to know when comparing it with other types of car finance.

PCP vs Hire Purchase (HP)

• PCP offers lower monthly payments because you only pay for the car’s depreciation, not its full value.
• HP spreads the total amount over fixed monthly payments. Once you reach the end of the contract, you own the car automatically.
• PCP gives you choices at the end—pay the final balloon payment, part exchange, or hand the car back. HP suits you if you know you want to own the car from the start.

PCP vs Car Leasing

• Leasing doesn’t lead to ownership. You return the vehicle at the end, with no option to buy.
• PCP includes the option to purchase through a final balloon payment. That gives you more flexibility if you want to keep the car.
• Leases may include servicing, but you lose control over how long you keep the car. PCP is ideal if you want fixed monthly payments and freedom to choose what happens next.

PCP vs Personal Loan

• A personal loan gives you ownership from day one. You buy the car outright, with no mileage limit or balloon payment at the end.
• PCP includes mileage restrictions and excess mileage charges. But it often comes with deposit contributions from manufacturers or lenders, which reduce the total cost.
• Personal loans may offer lower interest rates, but lenders usually require a high credit score. PCP may offer more accessible deals, depending on your credit profile.

What to consider before taking a PCP car finance deal?

Before you sign a PCP contract, understand how each detail affects your total cost and flexibility. We guide you through the key factors to help you choose the right car finance deal.

1. Annual mileage limit
   Agree on realistic mileage. You’ll pay excess mileage charges if you go over.
2. Interest rate (APR)
   The interest rate you’re offered directly affects your monthly payments and total amount repayable.
3. Optional final payment
   This is your balloon payment. Make sure the amount you’ll need to pay at the end suits your budget if you want to keep the car.
4. Deposit amount
   Some lenders or manufacturers include deposit contributions. These reduce the total amount you need to borrow and can lower your monthly payments.
5. Finance calculator
   Use our PCP finance calculator to estimate your monthly repayments, total cost, and optional final payment—based on your credit score and the value of the car.

As a credit broker, we help you choose the right car finance based on your credit profile, budget, and how you plan to use the car. We explain each cost clearly so you can sign your PCP contract with confidence. Carplus compares PCP deals from a wide panel of lenders and finance providers.

Pros and cons of PCP finance

If you’re unsure if PCP is the right car finance for your needs, we’ll help you decide. As a credit broker, Carplus explains the pros and cons of PCP based on your goals, credit profile, and how you plan to use the car. Here’s what you need to consider before you get a PCP.

Pros of PCP

Lower monthly payments than many other types of car finance

No resale risk—you can return the car at the end of the contract

Flexible end-of-term options—hand it back, part exchange, or pay the final ‘balloon’ payment

Optional extras from some finance providers, including servicing or extended warranty

Access to newer or better models through fixed monthly payments that fit your budget

Cons of PCP

You won’t own the car unless you pay the final balloon payment

Interest rates may be higher than those on a standard personal loan

Little or no equity if the guaranteed minimum future value is close to the actual value

Excess mileage charges apply if you go over the mileage limit

You may need to pay for repairs outside of normal wear and tear

We compare deals from trusted finance providers, help you understand the final amount you’ll need to pay, and ensure you choose the right car finance based on what matters to you.

Can you get a PCP with bad credit?

Yes, you can get a PCP deal with a poor credit score. You might face higher interest rates, and some lenders may ask for a larger deposit amount. But you still have options.

At Carplus, we help you get a PCP that suits your circumstances. As a credit broker, we work with a wide panel of lenders who consider different credit profiles. We explain the finance terms clearly and help you apply with the right finance provider from the start.

You’ll still need to pass a credit check and show that you can afford the monthly payments. We help you understand the final amount you’ll need to pay, including the optional final payment, any excess mileage charges, and the total cost of the agreement.

Here’s what you need to know before you apply:

• You may face a higher interest rate based on your credit score
• You may need to pay a higher deposit
• You’ll need to meet affordability checks and stick to the agreed mileage limit
• You’ll have the same end-of-term options—pay the final ‘balloon’ payment, part exchange, or hand the car back

We make PCP car finance accessible and clear. Get a PCP quote today and let us guide you through the process.

Is PCP the right option for me?

You might prefer PCP if:

• You want to keep monthly payments low
• You change car regularly
• You’re unsure if you want to own the car long-term
• You want flexibility at the end of the agreement

At Carplus, we help you decide if this is the right option. We explain the full cost, the optional final payment, and how much you may need to pay based on your credit history and budget. As a credit broker, we compare PCP deals from trusted lenders only.

Am I eligible for PCP finance?

You can apply for PCP finance if you meet a few basic checks. We make the process simple and explain every step along the way.

To get started, you’ll need:

• A monthly income of at least £1,200
• Your full name and date of birth (you must be 18 years old or over)
• A UK driving licence
• A mobile number and email address
• Your residential address (you must have lived in the UK for 12 months or more)
• Details of your employment or income source
• Confirmation of your residency status

You can apply online in minutes. We’ll review your information, confirm how much you want to borrow, and guide you through the rest. If you meet the criteria, we’ll introduce you to a limited number of lenders that match your profile.