What is Personal Contract Purchase
What is Personal Contract Purchase?
PCP, or Personal Contract Purchase - a vehicle finance agreement for individuals wanting a simple way to fund a vehicle
Lease Purchase is another type of vehicle finance which is ideal for non VAT registered customers who eventually wish to take ownership
Advantages:
- Low initial payment
- Fixed monthly payments
- No VAT on monthly payments
- You decide whether to sell the vehicle, return it or keep it at the end of the contract
- No concerns about depreciation or selling the vehicle if you choose to return it at the end of the contract
- A maintenance and servicing package can be included
- Transparency – a fixed balloon or guaranteed future value to purchase payment when you first take out the contract
- It may be possible to refinance the balloon payment
- Cost effective
- Flexibility – PCP can be used for new or used vehicles
Disadvantages:
- Some people consider it a disadvantage, when, at the end of the contract a decision must be made to sell, return or keep the vehicle
- VAT is payable on the maintenance/servicing portion of the monthly payment
- You must take out fully comprehensive vehicle insurance
More Information on Lease Purchase:
Personal Contract Purchase is often the choice for personal customers who prefer to have options once their finance agreement is ended. PCP customers pay an upfront payment at the start of the contract, then fixed monthly payments thereafter. At the end of the contract, there’s an Optional Final Payment, OFP, sometimes called the GFV (Guaranteed Future Value).
Clients then have the following options:
- the vehicle can be traded in against another vehicle from the dealership
- if the trade-in value exceeds the OFP, the difference can be used as a deposit on a new vehicle
- the vehicle can be returned to the funder. Provided the mileage hasn’t been exceeded, and the vehicle is in reasonable condition for age, no charge is incurred
- the vehicle can be kept either by paying the OFP in full or by re-financing the OFP.
To discuss PCP, or any other way to lease your van, contact us at Blue Chilli Van Leasing today. We’ll be happy to help.
