PCP (Personal Contract Purchase)

Private individuals Only

PCP gives you the benefits of leasing a vehicle along with the option to own it if you so desire. PCP enables customers to upgrade to vehicles that might otherwise be unaffordable.

A guaranteed residual value is set by the funder at the start of the contract, which gives the customer a number of options by the end, some of which are:

Part-exchange the vehicle and use the equity as a deposit for the next vehicle
Keep the vehicle by paying the outstanding residual value
Keep the vehicle and re-finance the outstanding value over a longer period of time
Hand the vehicle back at the end of the contract

Key customer benefits:

A very cost-effective way to finance a vehicle and hassle-free
The convenience of an optional fixed cost maintenance package.
Win win scenario at termination.

PCP FAQs

What is Personal Contract Purchase (PCP)?

PCP is for private individuals who want a hassle free and cost effective way to finance and maintain a vehicle.

Personal Contract Purchase (PCP) product was launched as a defensive tool to cover for those customers wishing to opt out of a company car.

At the start of the contract the funder sets the Residual Value of the vehicle which they then guarantee at the end of the contract. This gives the customer two options at the end of the contract:

- Hand the vehicle back to the funder should the value of the vehicle be less than the set Residual Value or the customer wants no hassle in disposing of the vehicle

- The customer may choose to pay the final payment and keep the vehicle or may return the vehicle in full satisfaction of the final payment.

The vehicle is registered in the customer's name. Customers can also enjoy the convenience of a full maintenance service, at a fixed monthly cost.

Road Fund License is only provided for the first year of the contract.

Can my client’s employers be noted on a PCP agreement?

PCP is designed specifically for private individuals. It is important to understand that in no way can the individual’s employers be involved in the arrangement. If the individual’s employers are involved in any way then the individual may be at risk of Car Benefit Tax (under section 157 of the Taxes Act 1988). This is often referred to as a P11D liability, being linked to ‘Benefits in Kind’ arising directly from employment. If you want to check we suggest that you contact the local Tax Office before committing to an agreement.

Who owns the vehicle?

The vehicle is registered in the Drivers name. The driver is also responsible for the up keep of the Road Fund Licence.

Is PCP subject to VAT?

VAT is only applicable to the maintenance (optional) element of the payments.

What is the initial outlay to my Customer?

The funder usually accepts three rentals in advance as a deposit, whereas 10% of the vehicle price is the market norm.

What Payment Options does my Customer have with PCP?

There are 3 different Payment/Rental Profiles which support this product:

Terminal pause
Should a customer take a 36 month contract, they will pay 3 rentals in advance, followed by 33 monthly rentals that are then followed 2 months where no rentals are due before the end of the contract.
Spread rentals
The normal payment profile in today's market as it presents the opportunity to show the customer a lower rental than 'terminal pause' but technically the same length of contracts. Should a customer take a 36 month contract, they will pay 3 rentals in advance followed by 35 monthly rentals and the contract ends on month 36.
Enhanced deposit
This is used when a customer has a part exchange and wishes to use this vehicle towards a deposit. Should a customer take a 36 month contract, they will pay 1 rental (should be no less than an equivalent 3 rentals) in advance followed by 35 monthly rentals and the contract ends on month 36.

Does the funder insure a PCP Vehicle?

No. It is the customer's responsibility to insure the vehicle. Please see the Terms & Conditions of the contract.

How does excess mileage work in conjunction with PCP?

With any PCP agreement, the predicted annual mileage of the vehicle is crucial, as it will affect the resale price at the end of the contract. Should that mileage be exceeded, a charge will be made for every mile over the agreed total contract mileage allowance at end of the contract period.