What is PCP Finance?
Personal Contract Purchase (PCP) is a flexible way to finance a car. You pay a deposit, followed by fixed monthly payments over an agreed term.
PCP defers part of the car’s value until the end as an optional final payment. This can keep monthly payments lower throughout your agreement.
When the agreement ends, you have three options. You can keep the car by making the optional final payment, swap it for something else, or hand it back if you don’t want to keep it.
PCP is Stoneacre’s most popular finance option available on eligible new and used cars.
Representative Example (PCP):
Borrowing £19,121.23 over 48 months with a representative APR of 11.36%, the annual interest rate of 6.46% (Fixed) and a deposit of £1,266.23, the amount to finance would be £17,855.70, paying £323.72 per month, with a total cost of credit of £6,194.43, an optional final payment of £8,511.57 and a total amount payable of £25,715.36 (incl. £399 option to purchase fee).
This represents an average of the deals that our customers receive on other vehicles. We are a credit broker and a lender. We can introduce you to a limited number of lenders and their finance products. We will provide details of products available, but no advice or recommendation will be made. You must decide whether the finance product is right for you. We do not charge you a fee for our services. Lenders will pay commission to us (either a fixed fee or a fixed percentage of the amount you borrow) for introducing you to them, this may be calculated in reference to a variable factor such as (but not limited to) the vehicle age, your credit score and the amount you are borrowing. Different lenders may pay different commissions for such introductions. Offers available to everyone over the age of 18, subject to credit approval.
How Does PCP Finance Work?
With PCP, you pay for the car through a deposit, fixed monthly payments and an optional final payment.
Deposit
You usually start with a deposit, which reduces the amount you need to borrow. A large deposit can also mean lower monthly payments because you finance less overall.
Monthly Payments
Your monthly payment depends on the car, your deposit, agreement length, and annual mileage. You agree to these details upfront, so you know what to expect each month.
Optional Final Payment
PCP leaves part of the car’s value for the end of the agreement. This becomes the optional final payment and is tied to the car’s Guaranteed Minimum Future Value (GMFV).
There is no standard amount, as it depends on the car and the finance agreement.
What Affects Your PCP Payments?
Several factors affect your monthly payment, and changing one can affect the overall cost.
Car Price
The car’s price affects how much you need to finance overall. Choosing a different model, trim, or specification can therefore affect your monthly payments during the agreement.
Deposit
A large deposit reduces the amount you need to finance, which can help lower your monthly payments. You can also use positive part-exchange equity towards your deposit.
Agreement Length
Your agreement length affects how you spread the cost. A longer term can reduce your monthly payments, but you may pay more interest overall because you’re borrowing for longer.
Annual Mileage
Your annual mileage helps determine the car’s expected future value. A higher allowance can increase your monthly payments, so choose one that reflects how much you realistically drive.
GMFV
The Guaranteed Minimum Future Value (GMFV) is the car’s expected value at the end. A higher GMFV can mean lower monthly payments and a larger optional final payment.
Interest Rate
Your interest rate affects your monthly payments and financing cost. A higher rate usually means paying more interest. Compare the APR and total amount payable for each financing option.
At Stoneacre, 48 months with an 8,000-mile annual allowance is currently our most common PCP setup.
How Can I Arrange PCP Finance with Stoneacre?
You can arrange PCP in a way that suits you. Choose a car first and arrange the finance afterwards, or check your eligibility before you start looking.
Choose a Car First
Find an eligible new or used car, then speak to our dealership about PCP. Stoneacre is a credit broker and lender. We work with finance providers to arrange and explain your options.
Check Your Eligibility First
You can also check your eligibility before choosing a car. This uses a soft search that won’t affect your credit score. A lender may carry out a hard search as part of a full application.
Use the Finance Calculator
On eligible cars, use the finance calculator to estimate monthly payments for your car. Adjust the deposit, term or annual mileage to see how your options could affect the monthly cost.
PCP availability on used cars depends on the vehicle and finance provider. Older or higher-mileage cars are less likely to qualify, although Hire Purchase (HP) may still be available.
What Happens at the End of PCP?
When your PCP agreement ends, you can keep the car, choose another vehicle, or return it.
Keep the Car
To keep the car, you make the optional final payment. Once you pay the optional final payment and any applicable purchase fee, you take full ownership, and the car is yours to keep.
Change the Car
If you’re ready for something different, you can part-exchange your car. If the car’s value exceeds the outstanding finance, you can put the positive equity towards your next deposit.
Return the Car
You can also hand the car back to the finance company. You must return the car within the agreed mileage and in the required condition. If not, the finance company may charge you.
Stoneacre can help with the next steps, including part-exchange or confirming service history if you return the car.
Mileage, Condition, and Possible Charges
If you return the car, you’ll need to stay within the agreed mileage and keep it in suitable condition.
Excess Mileage
If you go over your agreed mileage, the finance company may charge for the extra miles. Your agreement will state the excess mileage charge.
Vehicle Condition
The car should meet the finance company’s fair wear-and-tear guidelines when you return it. You may have to pay for damage that falls outside those guidelines.
Purchase Fees
If you choose to keep the car, your agreement may include a purchase fee in addition to the optional final payment. Check your agreement for the exact amount.
Why Customers May Consider PCP
PCP can appeal to drivers who want predictable monthly payments and more choice over what happens next.
Lower Monthly Payments
PCP defers part of the car’s value until the end. This can mean lower monthly payments than an equivalent Hire Purchase agreement.
More Choice at the End
You can keep the car, change it for something else, or hand it back, depending on what suits you when the agreement finishes.
Easier to Change Cars
If you like changing your car every few years, PCP can make the process straightforward. You don’t need to own your current car before changing it.
PCP vs HP vs PCH
PCP, HP and PCH all work differently, so the right option depends on what you want from the agreement.
| Ownership | Monthly payments | Mileage limit | Final payment | End of agreement | |
|---|---|---|---|---|---|
| PCP | Optional | Often lower than equivalent HP | Usually applies | Optional final payment | Keep, change or return |
| HP | Yes, after the final payment | Usually higher than PCP | Usually not | No large optional final payment | Own the car |
| PCH | No | Fixed rentals | Usually applies | None | Return the car |
PCP gives you more choice at the end of the agreement. HP focuses on ownership, while PCH is a lease where you return the car.
Useful PCP Guides
If you want to understand specific parts of PCP in more detail, these guides can help.
Is PCP Worth It?
PCP may appeal if you want lower monthly payments than an equivalent Hire Purchase agreement. It also gives you more choice when the agreement ends.
You should still consider the mileage allowance, optional final payment and total amount payable.
These can all affect whether PCP suits what you want from your next car.