How does PCP finance work?

If you've had another type of finance deal before, you'll find that car finance PCP deals are a mixture of the familiar and the new – here’s how it typically looks:

Deposit – as with most finance agreements, there is usually a deposit to be paid; while you’re not forced to have one, it is something that will help bring your monthly payments down, as it will reduce the overall cost of the finance.

Term – again, a familiar aspect of financing a car, choosing the length of your term is important, as a shorter term will increase your monthly payments, while a longer term will keep them lower. PCP finance deals typically last between 36-48 months, but can be longer or shorter.

Annual Mileage – one of the first factors that might be strange to some is agreeing what the annual mileage of the car will be for the length of the agreement. Again, this will have an impact on how much you pay monthly – fewer annual miles bring the payment down, while more miles per year will increase it.

Excess Mileage Charge - additionally, you will be charged on a per-mile basis for every mile you go over the total mileage for the contract, usually by a few pence per mile.

GMFV – this is the Guaranteed Minimum Future Value of the car come the end of the PCP contract. This is the optional fee that must be paid to make the car yours once you’ve made all your monthly payments - the term and mileage set at the start of the agreement play a big part in what this figure will look like.

PCP Car Finance at Stoneacre

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