The Car Expert has previously looked at different types of car finance available, but it is clear that many people are still unclear about the particular finance instrument which is pushed by virtually every manufacturer in the UK: the PCP (personal contract purchase or personal contract plan).  This is usually offered by the manufacturer’s own finance company, although there are some other lenders who offer PCPs as well.

What is a PCP?

Car finance - how a PCP personal contract purchase works - The Car ExpertA PCP is a form of car finance similar in principle to a Hire Purchase (HP), but instead of paying off the entire value of the car in monthly installments, you are effectively only paying off the depreciation.

In other words, you might be borrowing the same amount initially, but you are only repaying a portion of that borrowing.  At the end of a PCP agreement, there is still a final value (often known as the balloon) outstanding.  You have several options as to how to deal with this final amount, depending on whether or not you want to keep your car or change it.

What is the attraction of a PCP?

If you compare financing the same car on a PCP against an HP, the big difference is that you are paying off a much smaller amount of money, so you have a lower monthly payment and/or lower initial deposit and/or shorter repayment term.

Most people tend to change their cars about every three years.  Most buyers financing a car have a reasonably small deposit.  For this sort of situation, a PCP will give a much lower monthly payment than an HP, with the caveat that at the end of the agreement you will have to take action of some sort to settle the outstanding balance.  This means that on a PCP, the same car will cost considerably less per month to finance than on an HP, or alternatively you can buy a more expensive car for the same monthly payment.  This is what makes a PCP so attractive to the car buyer.

For dealers and manufacturers, a PCP has two great benefits: 1) the lower monthly payments mean that more of their customers can afford more of their cars; and 2) the final balloon payment at the end means that customers will, in all likelihood, buy another car on another PCP, giving the dealer/manufacturer a good opportunity of securing repeat business.

Breaking down the PCP

Deposit

As with an HP, a buyer will put down a deposit on their new car and finance the balance.  With a PCP, there is a maximum deposit that is allowed (which varies from finance company to finance company), but usually it’s about 30% of the total price of the car.  Your deposit can be cash or your current car as part-exchange (trade-in), or a combination of both.

Term

Most PCP deals are available for anywhere between 18 and 48 months, although the most common is 36 months.  As a general rule, longer terms give lower monthly payments, although it’s not necessarily a dramatic difference because longer terms have lower final balloon payments (which we address below).

Guaranteed Minimum Future Value (the balloon)

The Guaranteed Minimum Future Value (GMFV) is the key to how a PCP works.  As mentioned earlier, over the term of your agreement, you are only paying back a portion of the borrowing.  When you apply for a PCP, the finance company calculates a predicted minimum value for your car at the end of the agreement, and your deposit and monthly payments are paying off the difference between the initial buying price and this predicted value.  This final value then needs to be paid to settle the finance agreement, either by returning the car or paying out the remaining amount.

The finance company guarantees that, subject to certain conditions, that the value of your car at this time will be at least the same as the amount outstanding (hence, a Guaranteed Minimum Future Value).  So, if you want, you can simply give the car back to the finance company and the finance is settled.  If the market value of the car is less than the amount outstanding, that’s not your problem – the finance company takes the loss.

How is the Guaranteed Minimum Future Value calculated?

When you start the finance agreement, the finance company needs to know what the minimum value of the car is likely to be at the end of the agreement.  They predict this by taking into account the car you are buying (and some options or features may slightly improve the final value of the car), the length of the agreement (a car will be worth less after 4 years than after 3, for example), and your annual mileage (a car with 60,000 miles on the clock will be worth less than a car with 20,000 miles on it, for example).  The finance company will set this future value quite low, as it is their loss if the value drops below what you owe on the car at the end of the agreement.  The idea is that the car should be worth a bit more than what is owed at the end of the agreement.

What are my options at the end of the PCP term?

So you have reached the end of your PCP agreement and the finance company has written to you to remind you that you will have to settle the outstanding balance fairly soon.  What are your choices?  Well, in no particular order:

1)   give the car back.  The finance company has guaranteed that the value of the car will be equal to the balance outstanding, so you can simply just give it back and walk away.  This is subject to a few conditions, namely; the car must have not exceeded its agreed mileage, it must have been serviced on time (and usually by the manufacturer), and there must be no repairs required beyond normal fair wear and tear.  If your car does not meet the conditions, there will be financial penalties.  Effectively, your PCP has been like a lease.

2)   Pay the outstanding balance, either in cash or by re-financing.  You keep your current car and either own it outright or continue to pay off the remaining balance until it is all yours.  Effectively, you are turning your PCP into an HP.

3)   Part-exchange your car on another one.  It doesn’t have to be from the same manufacturer or dealer.  The dealer when you buy your next car will settle your current finance.  If your car is worth more than the GMFV, then any of that extra (called equity) is yours to use as deposit towards your next car.  Say you are offered £12,000 for your car, but your GMFV is £10,000.  The dealer will pay £10,000 to settle your finance and the remaining £2,000 is yours to put towards your new car.  This is the most common way to settle your PCP, and it is why dealers and manufacturers love it.

You may also be able to sell your car privately and keep any money over and above the GMFV, but check with your finance company first.  Some of them are happy with it, but some are not.

Can I settle my PCP early?

Yes you can (click here), but the important thing you need to remember is that the finance company does not guarantee the value of the car against your settlement until the conclusion of the agreement.  For example, if you want or need to sell your car two years into a four-year agreement, you will have to pay any difference between what your car is worth and what you still owe (called negative equity).  So if your car is worth £20,000 but your finance settlement figure is £22,000, then you will have to pay the extra £2,000 to clear your negative equity.

There is usually a charge to settle a PCP early, but it is not normally large.  Some finance companies also allow you to pay in lump sums during the term, to either reduce your monthly payments or bring the end-date forward.  Some allow it with no charge, some will charge you for it and some don’t allow it at all.  Make sure you check before you sign up!

Is a PCP right for me?

You need to make sure you properly understand any finance agreement before you sign up for it.  Be aware of exactly how much you are paying in interest and fees, and make sure you are not over-stretching yourself.  If that means that you can’t afford the car of your dreams, then so be it.  There will always be additional expenses when running a car, and if you can’t afford to eat because your monthly car payment is due then you have made a fairly fundamental error.

Broadly speaking, if you are likely to change your car in a few years’ time, then a PCP can be a cost-effective way to finance it.  If you are going to keep it for longer than that, then you may well be better off with an HP and pay the car off in larger equal installments instead of a few years of lower payments then a big hit at the end.

Read the finance documents carefully and make sure you are comfortable with the numbers offered.  Ask as many questions you like before you agree to anything to make sure you understand the full implications of the agreement, as it is better to feel silly before you sign up than feel very stupid afterwards!

Names given by manufacturers to their PCP plans:

Alfa Romeo PreferenzaAudi SolutionsBMW Select, Chrysler Horizon, Citroën Elect, Fiat I-Deal, Ford Options, Honda Aspirations, Infiniti Selectiviti, Jaguar Privilege, Jeep Horizon, Kia Access, Land Rover Freedom, Lexus Connect, Mercedes-Benz Agility, MINI Select, Mitsubishi Alternatives, Renault Selections, SEAT Solutions, Škoda Solutions, smart Agility, Suzuki Driveplan, Toyota AccessToyotaVauxhall Flexible PCP, Volkswagen Solutions, Volvo Advantage.

Got questions?  Raise them on The Car Expert forum.  Simply click here to go to the forum discussion on this blog.

Stuart Masson is the owner and editor of The Car Expert, a London-based website which provides expert and impartial advice for anyone buying a new or used car, as well as news and information from all over the automotive world.

This Post Has 60 Comments

  1. John Dawes

    What recognised guidelines cover the condition of repair / disrepair at the end of the term if I hand back to dealer. The contract with the finance company uses fairly subjective terminology. There are a couple of parking scrapes but the milage is significantly lower than originally agreed ( almost half) so I would expect one to offset the other and me to walk away with no charges?

    1. stuart

      Hi John. Unfortunately no, it doesn’t work that way and the contract is always set out in the finance company’s favour. Your agreement allows for a maximum mileage, but there is no provision for your mileage being less. They are also allowed to charge you for the parking scrapes if they are considered damage rather than normal wear and tear (which they almost certainly will be). You can try and negotiate with them, but it almost certainly won’t work.

  2. Darren game

    I have had my BMW 1 for 9 months now . I took out a pcp of 36 months. But I’m getting bored with the car, is it possible for me to change it now or do I need to keep it for 3 yrs ? Also can I go to any dealer to do this

  3. tmrinaldi

    Hi Stuart, really interesting article. I’ve wanted a Qashqai for years so would like to take a new PCP out. I have a car which is 14 months into a 36 month agreement. I have £2k in equity on my existing car after settlement and I would like to take a new PCP at 6,000 mile per year over 48 months to keep the monthly payments down, knowing that I’ll do over 14,000 miles per year. I’m very unlikely to hand the car back so does the 6,000 mile per year matter apart from making a nonsense of the GFV? Thank you.

    1. stuart

      Hi tmrinaldi. Bear in mind that if you are planning to pay the car out and keep it, you have to have the funds in place to be able to settle the PCP at the end of the term. If you are going to take out a 48-month PCP with the intention of keeping the car, you might also look at other options like a 5-year HP so there is no balloon to pay at the end of it.
      Intending to run massively over the agreed mileage is a risky strategy. What you are doing is intentionally keeping the GMFV higher than you expect in order to keep your monthly payments low, and banking on having the funds in place in 4 years’ time to settle up. If anything changes during the next 4 years and you suddenly need to settle your PCP early, you will have put yourself into a severe negative equity position. Also, if the finance company finds out that you have knowingly underestimated your mileage, they may decline to finance you or take action against you as it is basically an act of fraud (you are knowingly devaluing the asset by far more than the stated amount).

  4. Hitman

    Great article. A quick question I am coming to the end of a 3 year PCP deal in 2 months. The car is worth less than the GFV. I will have gone over the agreed mileage by around 11k! The GFV is £16,200. I would quite like to buy the car at the end. Is there anyway to negotiate the £16,200 figure down or is this fixed?

    1. stuart

      Hi Hitman. The figure is fixed, as it is simply the amount of the loan that is unpaid and needs to be settled. You can certainly try to make the finance company an offer, but I have never heard of it working before!

  5. Emma

    Hi! Just some quick advise please on PCP contracts. I have already taken out one PCP agreement for my son – can I take out another for my daughter too or are you only allowed to take out one agreement under one name? It will be through 2 different dealerships. Also is it difficult to get a PCP contract if you credit rating is average? Any help/advise greatly appreciated.

    1. stuart

      Hi Emma. Have a look at this article about taking out a PCP for someone else. In short, you’re not allowed to do it, so you’re probably lucky that it worked the first time around. It doesn’t matter if it’s the same dealership or not, as all the finance companies have access to the same credit information about you, which is your Experian report or similar.

  6. stewart

    hi , great article, I just wanted to know the realistic options and consequences if for example you were to lose your job whilst within the first year of a pcp deal, can you hand the car back but pay some penalty, I take credit score would be effected, but what are the actual options available ? thanks

    1. stuart

      Hi Stewart. The best bet is to contact the finance company straight away and talk it through with them. You can settle the PCP early and sell the car, but the ‘penalty’ is that you will almost certainly have a shortfall to cover thanks to your car’s depreciation. Your credit score is only likely to be significantly affected if you start missing payments and default on the loan.

  7. Andrea

    Hi Stuart,

    I’m coming to the end of a 3 year PCP. I think the agreement should finish at the end of August. Should I have heard something from the finance company (Santander) or the dealer (Mazda) about my options by now? I want to exchange for a new car but with a different dealer. Should I go straight to the new dealer?

    1. stuart

      Hi Andrea. It is surprising that you haven’t heard anything from the finance company, and unusual that the dealer hasn’t bothered calling to try and lure you into a new car. You are most welcome to go to any dealer you like to purchase a new car. That dealer will settle your finance (you will need to provide a settlement letter from Santander) as part of the part-exchange process.

        1. stuart

          Quite possibly, yes. Your agreement with the bank is for an initial payment of £X, however many monthly payments of £Y and a final balloon payment of £Z. If you wish to hand the car back rather than paying the balloon, it is your responsibility to notify them oF this. If you are going to part-exchange the car on another vehicle, you will need to give the dealer your settlement figure from Santander and they will settle the balance for you. This needs to be done before your balloon payment is due. If you do not notify Santander, they could assume that you intend to keep the car and so take the final payment. Usually the finance company will try to notify you in advance, as most people don’t have that sort of money in their bank account and they don’t want to put you into default unnecessarily, so I’m surprised that they haven’t written to you.

  8. Mary

    Hi Stuart

    We are 12 mths into a PCP agreement & thinking of changing cars, likely to one of a lower value, worth while or hold off for a while longer? Our other thought was to make a overpayment, not likely to be huge but maybe a couple of thousand, is it that is something worth doing if you can? Thank you

    1. stuart

      Hi Mary. You can settle your PCP early, but it will be a question of how much it is going to cost you to do that. The linked article has more detail about it. Paying an overpayment will lower your remaining monthly payments, but won’t change the end date or the balloon value at the end of the agreement. If it suits your needs to do that then fine, but most people don’t find it that beneficial.

      1. Mary

        I thought if you settled up a large part or all the payments in one go for example (not including balloon) of PCP it may alter the amount of interest, as in effect you aren’t having the finance for as long, even if the agreement end date is the same oray alter t&cs of agreement, you could maybe exchange early if wanted etc?! Or does principle stay the same. The thought behind it is whether we use some savings to alter PCP buy paying a large portion off or possibly buy a cheaper car (cash) for the errands/school run etc as current car is not so economical for this (& the mileage clause is something I have in my mind) & use the “good” car for weekends, which sounds little uneconomical to pay for a car you are not using to full potential but still paying a lot for (if that makes sense?)

        1. stuart

          Yes, you are correct. If you settle your finance agreement early, you will save the interest owing on the remaining period of the loan. However, most finance companies will charge you a fee to settle early, so that will take a bite out of your interest savings. If you are making an overpayment, they may or may not charge you a fee so best to check.
          If your plan is to change the car early, then you can either make an overpayment now to reduce the settlement figure in a few months’ time, or settle it all now and have a larger settlement figure. It’s not going to make a massive difference – you either pay more now or pay more later.

  9. Paul

    Hi there, i need some advice please. I have taken out HP on my car and have only paid 5 months off. (Its a 5 year loan) i have decided i want to change my car for a more expensive one with the same dealer. Is that possible?

    1. stuart

      Hi Paul. You will need to settle your current Hire Purchase and start again. This is basically the same process as settling a PCP early. Be aware that as you are very early into a 60-month agreement, it is quite likely that your finance settlement will be considerably higher than your car’s value, so you may have to pay quite a bit of money to settle your current car before worrying about another one. Check our guide for what to consider before taking car finance to make sure you’re not going to run into the same issue again.

  10. Mary

    We brought a brand new car in july last year, on finance on a agreement I thought was HP and I now discover is PCP. We are 11 mths into agreement & the car had sat at dealership for over 6 wks awaiting parts for a technical issue (we have been given a courtesy car). We are wanting to get out of the PCP is this possible? – we put down a £10k deposit, on a £36k car, on a 48 mth deal. It was not by the way explained to me about the final repayment etc & am actually a)feeling silly for not seeing it before b) cross at dealership for not full explaining it all to me (a large nationwide dealer) What would be are best option? Thanks

    1. stuart

      Hi Mary. Yes, the dealer should be explaining everything fully when they are selling you a finance agreement, but you also have to take responsibility for reading a contract before you sign it. Some basic maths would show that after 48 months of payments and your deposit, you are still well short of paying for the whole car (plus interest). You can settle the PCP early, but that is not really going to help you. Your best bet is to ride out the last three years, save up a deposit for your next car over the next three years and take an HP on your next agreement.

      1. Mary

        Thanks for the reply. Would it be worth waiting another year & looking into voluntary termination? Part of reason for wanting to get out of the HP/PCP is we are going to be buying a new house (not anticipated last year) & want this off!! Cheers

        1. stuart

          Yes, you can voluntarily terminate the agreement once you have repaid 50% of the total amount owed (which is not the same as the total amount financed, as you need to include interest and fees). However, the finance company will probably not want to finance you on another car if you do this, so you will have to look elsewhere for your next car. I am going to do an article on voluntary termination in coming weeks, so keep an eye out for that – it’s not always as easy or attractive as it sounds.

          1. Mary

            Ok thanks, it does sound kind of easy, but reading a little more seems to effect credit etc Husband thinks we should just bite bullet & keep slogging away at it. Think this may well be a case of lesson learnt & not be wanting repeat situation. Out of curiosity, after 4 yrs and you either pay outstanding balance or return car, if it’s worth more (which seems to be general idea) what happens to the excess balance? I know the dealership likes to encourage you to use it as deposit on next car, but if you don’t what is the “deal” thanks

          2. stuart

            Voluntarily terminating your PCP should not affect your credit score/credit rating, as it is a clause built into every HP and PCP agreement by law and you are acting entirely within your agreement. The finance company won’t like it, as it means they don’t get the remaining payments from you and they inherit a car which is probably worth less than your outstanding settlement. They will probably decline to finance you again, as you have just told them that you can’t be relied upon to repay your borrowing, but it may not affect other companies offering you finance (although it will be noted on your credit report, so they will see it).
            Don’t assume your car will be worth more than the settlement after 4 years. The whole principle is that it should be about even with the settlement, and if there is any equity then it is likely to be quite small. You are not obliged to use it to buy another car so you can keep the difference. However, a dealer will usually only take your car on part-exchange and settle your finance if you are buying another car, so you may have to sell it privately to achieve this.

  11. Michael

    Hi Stuart,

    I am looking to get my first car. I have seen a Vauxhall Corsa 1.0i Excite 3dr

    35 Monthly Payments of £169
    Customer Deposit: £169
    Vauxhall Deposit Contribution: £1,903
    Term of Agreement: 36 Months
    Option to Purchase Payment: £3,800
    On The Road Cash Price: £11,787.35
    Total Amount of Credit: £9,715.35
    Total Amount Payable: £11,787.35
    Rate of Interest (Fixed) 0%
    Representative 0.0% APR

    It comes with 1 years free insurance and a Lifetime Warranty too.

    Paying for the car, is all i’m doing is paying the deposit and then the monthly payments?

    Also at the end of the term, can i just give back the car to the dealership and pay nothing extra?
    Unless i’ve breached the terms of the contract that was agreed with the sales advisor.

    Obviously i’ll be paying the insurance for the final 2 years and 3 years road tax.

    Thanks,
    Michael

    1. stuart

      Hi Michael. Yes, assuming you have met all of the criteria (mileage, servicing, condition), you can simply give the car back to Vauxhall Finance at the end of the agreement. You will need to make sure that you follow their processes for giving it back, and communicate your intention to do so well before the end of the agreement. Make sure you keep your car in good condition, as they will be able to bill you (at whatever rate they choose) for any repair work – and they will be super-fussy about scratches, chips, kerbed wheels and so on.

  12. Christine Laing

    I would like some advice regarding PCP. I currently have a Nissan Qashqai on PCP since 2012. The car is currently at the dealership with a problem with the DPF system. It has had one attempt of regeneration under its warranty which failed. We have now been told it will cost £1500 to repair the system. The car did not have the DPF warning light installed so we were unaware of the problem and knowledge on how to rectify it. Does the finance company have any repsonsibility on the cost of repairs for the car? As we are only hiring it as such. We have made a complaints case against Nissan with their customer services. We no longer want the car as it will not suit us with the driving conditions we do. Where do we stand on handing car back? As we owe half the cost on the car which is £10,000.

    Any advice would be great

    1. stuart

      Hi Christine. If your DPF system has clogged and failed with no warning lights, then it is probably an issue with the car that should have been recognised when it was handled under warranty the first time. Is the car still under warranty now? My guess is no, since they are now asking you for £1500.
      A DPF system should give you two warnings as the filter fills up (click here for more info). This should also have been explained to you by the dealer when selling the car. Try again with Nissan UK’s head office to see if they can/will assist.
      A PCP is more than just hiring a car – it’s more like an interest-only mortgage. You have the logbook, not the finance company. A lease (or contract hire) is simply hiring the car. Having had the car for two years, you can’t give it back under the Sale of Goods Act, but you can sell the car and settle the PCP agreement (click here). If you have paid off more than 50% of the total amount owed (which is different to 50% of the amount borrowed) then you should be able to give the car back to the finance company using your voluntary termination rights.

      1. Christine Laing

        Thanks for your reply. The car is still under warranty but the warranty only covers regeneration which they have done but it didnt make a difference. It was just the EML that came on, then went off then came back on a few days later.
        There was no mention of DPF when we were buying the car, if they had said then we would have gone for a petrol version or a different make of car.

        We are hoping for a phone call today from head office to see if they will assist. Its our last hope as we do not have that sort of money to be handing over. We would have had the car two years this august, not sure if this makes a difference to the Sale Of Good Act?

        1. stuart

          You have had the car and full use of it for two years, and it fundamentally won’t be in the same condition it was when you bought it, so the Sale of Goods Act won’t apply for you to be able to give the car as being ‘not fit for purpose’. I’m not sure why Nissan won’t replace the DPF or any other systems if they have failed while the car is under warranty – if no warnings have come up, then as a driver you have no clue that the DPF is full.

    1. stuart

      Hi Alan. There is no right or wrong; whichever suits your circumstances better. The car’s starting price and final value are the same either way, so you can either pay more up front and less each month, or less now and more each month. The more money you have under finance, the more interest you will pay in total.
      The dealer will always want you to finance more money, as they get paid a commission on the total amount financed by the finance company.

      1. Christine Laing

        Its been a fight really between the dealership and us. Anyway the outcome is customer services are paying 50% of the cost of the part, leaving us with a bill of £1,000 left to pay. Dealership wont pay unless we decide to do a part exchange for another car. They will give us £11,000 which will pay off the rest of the pcp & pay for the rest of the repair and give us £500 on another car. We have to take that offer as we have no other choice.
        Thanks for your advice and help

  13. Steve

    Hi Stuart,
    Very clear and concise article thank you.
    My last financed car was a 2006 V8 Vantage which I put 33% deposit down on a HP agreement.
    Having sold the vehicle I am now interested in a 2007 R8 but trying to stick to monthly budget the same or lower than my HP payment was for the Aston.
    I’m very likely to change cars in 3 years and PCP sounds right for me.
    I have been looking at R8s upto around £40k but some are Cat D repairs from dealerships (hence lower prices).
    Is it true that most finance companies will not PCP finance a cat d repaired car or a car over a 3 years old?

    Thank you in advance

    Steve

    1. stuart

      Hi Steve. Each finance company will have its own policies on things like Category D repairs and vehicle age. With Audi Finance, the age requirement is (well, it used to be, don’t know if it has changed) that the car had to be no more than 6 years old at the end of a PCP agreement (and about 70,000 miles from memory). So you could possibly take a 4-year-old Audi on a 2-year PCP. I don’t know if they will finance a Cat D car, though. Usually, Audi dealers won’t carry Cat D or Cat C stock so it’s not normally an issue.

  14. steven

    i am looking to use PCP to finance the purchase of a car. I have done my research and reduced it down to 2 models from the same range of cars. The cheaper car with a manufacture contribution works out to the same monthly repayments as the more expensive car. The final balloon amount for the cheaper car is thousands of pounds less than the more expensive car, making the amount financed greater. Is it financially better to go for the more expensive vehicle or go with the cheaper car? I may what to purchase the car at the end of the agreement-cheers

    1. stuart

      Hi Steven. It depends on whether you really are going to purchase the car at the end. If the monthly payments and initial deposit are the same, then the more expensive car is the better choice (ie – you are getting more car for your money). However, if you are going to pay out the settlement at the end and keep the car, then the cheaper car is thousands of pounds better. Many people say that they plan to buy the car out at the end of the agreement but never do, as they don’t have the money at the time.

  15. Graham - Evoque Owner

    Really Helpful article, I have two years left on my PCP Plan, due to excessive travel due to work, I am currently over my agreed mileage by 8000. If I continue with this excess mileage and purchase the vehicle, will I still be charged for going over the agreed mileage plan ?

    1. stuart

      Hi Graham. Short answer = no, you will not be charged.
      The settlement/balloon/GMFV figure set at the beginning of the agreement is the amount you owe to purchase the vehicle outright at the end of the agreement. If that is your plan, then the mileage is irrelevant, as is the vehicle’s condition or servicing history. It only matters if you are asking the finance company to take the car back.
      If you do not want to keep the car, you can probably contact the finance company and ask them to recalculate your remaining payments based on your increased mileage. They should be able to adjust the GMFV and increase your payments to cover the increased depreciation. If so, check to see if there are any charges for doing this.

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  17. Ben julien

    Great article. I currently have a PCP plan and have 17 months left out of a 3 year agreement with the balloon figure on the end. Struggling to keep the payments due to a change in circumstances. Can I give the car up and get out of the agreement?

    Ben

    1. stuart

      Depending on the nature of your change in circumstances, the best bet is usually to contact the finance company ASAP and discuss it with them. PCPs do have termination rights which you may be eligible for, or it may be that your car is worth more than its settlement figure. Or you may have to pay some money to clear the settlement figure.

  18. Geoffrey McKnight

    Hello. I am in the same situation as Noel above and thankyou for the guidance. Can you tell me though, who would be the registered owner of the car? Is it the finance house or the car buyer?
    Regards
    Geoffrey

    1. stuart

      Hi Geoffrey. The UK is complicated, in that the finance company is the registered owner but you are the registered keeper on a PCP. On a lease, the finance company is both the owner and the keeper. Once you settle the finance, you become the registered owner. However, most of the time there is no real paperwork to explain this, and in real-world terms it means that the keeper can sell the car as long as they settle the finance outstanding.

  19. Paul Seymour

    Can I sell my car that is on a PCP agreement to another company and they pay the settlement figure. So that I may buy one of their cars. One of the downsides is you can end up ;coked into a brand and the dealer turns out to be difficult

    1. stuart

      Hi Paul. By “another company”, I assume you mean another dealership? You certainly can, if the value exceeds the settlement figure, and you use the equity for your next car.

      If the value is less than the settlement figure (but you have met all your contract conditions), then you can usually just call your finance company and they will come and collect it.

  20. Noel Bratt

    Hi just reading your interesting article on PCP. I am buying a new car now and can pay cash for it, I have already had a £1000 contribution from the manufacturer. The dealer is suggesting taking out PCP This entitles me to another £1000 contribution from the Finance house who claim it back from the manufacturer then after one or two months of payments to ask for a settlement figure thus picking up £2000 off my car minus the payments. I am assured this is quite above board but am still sceptical. Mainly because the GFV they state at the beginning is based as you know on my estimated mileage 6000 miles and the term of 24 months. Would this be possible to do in your estimation? I would welcome your views. Kind Regards Noel

    1. stuart

      Hi Noel. We have recently covered this in our forum (click here), so check that out. In short, yes you should be able to do this. You can settle the finance at any time during the agreement, but the guaranteed value only applies at the end of the term.

      If you cancel within 14 days, you should be able to avoid paying any interest or fees. If you cancel after a couple of months, your settlement fee could be considerably higher as your interest payments and fees will be added.

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