PCP (also known as Personal Contract Purchase) is arguably one of the most popular and the best car finance option. It allows for quite a lot of freedom and it’s rather flexible, making it the perfect choice for those not looking to be tied down to a single vehicle. With many options to choose from however, deciding whether PCP is suitable for you may be a little difficult.
First and foremost you must understand how personal contact purchase actually works. Similarly to hire purchase, it involves you getting a car and paying for it over a period of time. Depending on how long you take out your loan for, this could be anywhere from as little as a year up to five years. Your monthly payments are typically a little lower due to the fact that at the end of your term you are faced with an important decision. You can either keep the vehicle by making one large final payment, you can return it or exchange it for a different car, starting the process again. You are virtually leasing the car until you decide what to do with it at the end of your term.
Since PCP allows for a lot of freedom, it’s normally reserved for those with excellent credit scores. It can be quite risky for the finance provider, which is why it may not be the most suitable option for you if your credit is poor.
The same rules still apply when it comes to missed payments. If you fail to make them on time, the car will be repossessed to pay for the full value of your debt. This is why it’s important that you only apply for finance if you are perfectly confident that you will be able to afford it.
So is PCP the best car finance option? That depends on your circumstances. Each person is different; therefore, it’s difficult to tell you exactly what you should do. With countless options out there, you will likely have no trouble finding a suitable solution. Simply apply for finance today, and benefit from the perks of owning a new car.