What is Personal Contract Purchase (PCP) & How Does It Work?

Personal Contract Purchase (PCP) is a finance scheme that allows your monthly payments to be reduced, because an agreed fee is deferred until the end of the contract. Essentially, you only repay part of the value of the car over the term of the agreement. Each contract typically lasts between 24 and 48 months. You'll pay an initial deposit, followed by monthly payments at have three choices at the end of the agreement:

  1. Pay the guaranteed future value (aka 'balloon payment') to own the car outright.
  2. Exchange your car for a new model, and a new PCP agreement.
  3. Hand the car back and walk away.