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(PCP) Personal Contract Purchase

A Personal Contract Purchase agreement or ‘PCP’ is a finance product designed to help reduce monthly payments by delaying part of the repayment until the end of the agreement.

This final payment is often referred to as the GMFV or Guaranteed Future Value and is guaranteed by the finance lender. This figure is calculated using industry data and determines the likely value of your vehicle at the end of the finance agreement, in line with the term and estimated annual mileage. The GMFV will offer you additional protection in the future should car values drop in the used car market.

You will need to decide on the length of your agreement, your initial deposit (this may include any money from a part-exchange), and the number of miles you will cover in a year. You will then be offered a monthly payment that suits your circumstances based on the criteria.

Monthly payments are fixed, subject to any additional administration fees that may be applied, and so is the interest rate, so you won’t need to worry if interest rates change.

You will not own the car during the contract period but the opportunity to purchase will be available at the end of the contract if the final payment is paid. If you wanted to upgrade your car, to the latest technology and specification, you could trade in your current vehicle and use any equity towards a deposit.

Finally, if the car has lost value versus your GMFV because of market conditions you will have the option to simply hand it back. Excess mileage charges could apply if you exceed the contracted mileage. Additional charges could also apply at the end of contract if you exceed ‘fair wear & tear.’ However, these can be avoided simply by ensuring the car is correctly serviced and maintained.

Naturally, your finance is subject to underwriting and approval by the lender. If you’re looking to pay lower monthly payments and change your car regularly, a Personal Contract Purchase could be for you.

(HP) Hire Purchase

Hire Purchase is a finance product that allows you to budget accurately by giving you a fixed interest rate and fixed monthly payments, subject to any additional administration fees that may be applied and a final option to purchase fee.

It’s one of the simplest forms of finance you can choose, because there are no restrictions on your mileage, so it’s easier if you are unsure how much you will use the vehicle.

You will need to decide on the length of your agreement, how much deposit you would like to pay (this may include any money from a part-exchange) and agree on a fixed monthly payment that suits your circumstances. Your monthly payment can be easily adjusted to fit your budget by varying factors including the agreement period and deposit.

At the end of the agreement, once you have paid off the agreed final payment and option to purchase fee, you will take full ownership of the vehicle.

Naturally, your finance is subject to underwriting and approval by the lender. If you know you want to own your car and you don’t want any mileage restrictions, Hire Purchase could be the finance product for you.

Negative equity? Poor credit history? Speak to us first!

Whatever your circumstances we are here to help. We have great relationships with a panel of lenders who specialise in automotive finance products, so speak to us first.

Advice on obtaining motor credit

Being refused for credit doesn't mean you can't get credit

Each lender has their own perspective on what type of customers they want to lend money to. So just because one lender has rejected your application doesn't necessarily mean that all lenders will. Be careful not to make too many applications as this can adversely affect your credit score. Using a service such as Motor Credit Check can help your dealer place your loan with the lender most likely to accept your credit application.

Improve your credit score

Here are some simple tips to help you improve your score.

Make sure you are registered on the electoral role. Lenders will check this and if you are not showing on the role at your current address it will be a lot harder to obtain credit.

As mentioned above avoid making multiple finance applications over a short space of time. Lenders take this as an indicator that you may be struggling to get finance and it can have a serious affect on your credit score. Services such as Motor Credit Check can assist in this respect by helping you understand where your finance applications are best focused without adversely affecting your credit rating.

Pay back what you borrow. It sounds obvious, but by repaying credit on time you will make you much more attractive to future lenders as you will have demonstrated that you are a responsible borrower.

Pay by Direct Debit wherever possible. By using Direct Debit your payments will be made on the date they are due and this will be a major plus on your credit file.

Lenders like stability. A landline telephone number is a good indicator of stability. Other things that can demonstrate stability include living at a single address, holding a single job and sticking with the same bank over extended periods.

Why finance your car through us?

We realise that you could take out a personal loan, but your options could be limited and the application process could be lengthy for each application. Allowing us to assist is simple as we aid in the completion of the paperwork, there’s no hassle of posting important documents such as your passport for verification either.

We are able to provide a range of flexible and highly competitive finance options and our trained specialists (regulated by the Finance Conduct Authority - FCA) will fully explain all the options available in ‘jargon-free’ language. This enables you to make an informed decision suited to your pocket and individual circumstances.