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What is PCP?

Personal Contract Purchase, or PCP for short, is a way of getting a car through a finance agreement. Here's how it works: You pay a deposit, and then you make monthly payments over a few years, like two to four years. These payments are based on the difference between the car's initial value and what it's expected to be worth at the end of the agreement.

Now, when the agreement comes to an end, you've got three options.

• Option 1: You can pay a final payment, also known as a balloon payment, to buy the car outright.
• Option 2: You can simply give the car back to the finance company, as long as it's in good condition and hasn't gone over the agreed mileage limit.
• Option 3: You can part-exchange the car for a new one.

The thing with PCP is that it can give you lower monthly payments compared to other finance options. But, you do need to keep in mind that you won't actually own the car until you make that final payment. Plus, you'll need to pay interest on the finance amount, so the total cost of the car will be higher. So, it's important to do your sums and work out if PCP is the right option for you.

PCP Disclaimer

This Personal Contract Purchase (PCP) agreement is subject to terms and conditions, including those related to annual mileage and the residual value of the vehicle. By entering into this agreement, you acknowledge and accept the following:

1. Annual Mileage: As part of your PCP agreement, you have committed to a specific annual mileage limit. You are required to adhere to this limit throughout the duration of the contract. Any excess mileage incurred will be subject to additional charges, as detailed in the agreement.

2. Residual Value: The residual value of the vehicle has been determined based on the agreed-upon annual mileage and other factors. The residual value represents the estimated value of the vehicle at the end of the contract term. This value is important, as it forms the basis for the optional final payment, should you choose to purchase the vehicle at the end of the agreement.

3. Accuracy: You are responsible for providing accurate information regarding your estimated annual mileage at the inception of the contract. Any discrepancies between the estimated mileage and actual usage may impact the residual value of the vehicle and may result in additional charges.

4. Changes in Circumstances: If your circumstances change and you anticipate exceeding the agreed-upon annual mileage limit, it is your responsibility to inform the finance provider as soon as possible. They may be able to adjust the terms of your agreement, subject to their discretion and any applicable charges.

5. End-of-Contract Options: At the end of the PCP agreement, you will have the option to purchase the vehicle by paying the optional final payment, which is based on the residual value. Alternatively, you can return the vehicle to the finance provider without further charges, provided that the vehicle is in good condition and within the agreed-upon mileage limit. You may also have the option to enter into a new PCP agreement for a different vehicle, subject to credit approval and the finance provider's terms and conditions.

By proceeding with your application, you acknowledge that you understand and accept the terms provided by your lender relating to annual mileage and residual value as part of this Personal Contract Purchase agreement.