Personal contract purchase is becoming a more popular way of financing a new car, allowing you to contract into an agreement for a set amount of time with agreed mileage. [explain more]
:: Choose a new car manufacturer below
:: Select a particular model from the range
:: Fill in the quick, easy quote form
:: Compare up to 5 competitive quotes!
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PCP is a product designed specifically for the private individual where all the protections afforded by the Consumer Credit Act 1974 and the Financial Services (Distance Marketing) Regulations 2004 are available to the consumer.
The following points are all taken into consideration by the provider in order to work out the monthly Personal Contract Purchase payments:
The answer to this normally taken for granted question is, not necessarily! To explain this you have to understand that there are many factors to take into consideration when working out who is providing the best deal, and the mistake is not to look solely at the monthly Personal Contract Purchase price quoted, but all the costs involved. This would include all the acceptance fees applicable, along with the optional final payment, for some companies will value the vehicle at a higher rate than others at the end of the contract.
It depends on the amount on which the rate is going to apply. If the provider has negotiated good vehicle prices and residual prices, the amount on which the competative rate will apply will mean that you are getting a good all round deal. Although if the vehicle price is high and the residual is low a good APR would not mean that the deal is competitive, for the amount on which the rate would apply would be considerable.
It is obviously one of the key factors to achieving a competitive PCP price by getting a good APR rate. Although make sure you see it as one of a combination of factors that need to be competitive and not the ultimate.
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An Example of two Personal Contract Purchase Quotes can be seen below:
| Key Factors | PCP Quote A | PCP Quote B |
| Vehicle list price | 13,991.00 | 13,991.00 |
| Providers discount price | 13,745.00 | 13,357.00 |
| Deposit | 1,000.00 | 1,000.00 |
| Finance amount | 13,745.00 | 12,357.00 |
| Finance term | 36 months | 36 months |
| Monthly amount | 379.01 | 250.26 |
| APR | 10.4% | 7.2% |
| Maintenance | 0 | 0 |
| Optional final payment | 5,700.50 | 5,274.00 |
| Initial acceptance fee | 135.00 | 0 |
| Final payment fee | 0 | 0 |
| Total amount payable | £16,600.85 | £15,283.36 |
