Considering a new car? PCP finance might be the solution you’re looking for. Personal Contract Purchase (PCP) finance is a type of credit agreement that includes an Annual Percentage Rate (APR) of interest, which is the cost of borrowing. However, before diving in, there are several factors to consider to determine if PCP car finance deals are the right option for you.
Affordability and Commitment
First and foremost, assess how much you can afford to pay each month. PCP finance requires fixed monthly payments along with a final balloon payment at the end of the agreement. Ensure your budget can accommodate these monthly payments. Also, think about the duration of the financing. PCP agreements usually span between 2 to 4 years, so consider if you can commit to this period and manage the final payment.
Flexibility and Conditions
Understand the terms if you need to end the agreement early. Some PCP agreements allow you to return the car, but this may come with charges. Additionally, if you wish to keep the car at the end of the term, be prepared for the final balloon payment, which is often higher than your regular payments.
Mileage and Maintenance
You will need to agree on an annual mileage limit at the start. Exceeding this limit or causing unreasonable damage to the car can result in extra charges. Although some PCP agreements offer zero deposits, this typically leads to higher monthly payments. Weigh all these factors to decide if PCP finance suits your needs.
What Are The Main Elements of Personal Contract Purchase?
Personal Contract Purchase (PCP) agreements allow you to finance a new or used car with manageable monthly payments, culminating in a final balloon payment. Before committing, consider your monthly budget, the contract length, and the implications of ending the agreement prematurely.
Key Components of PCP Agreements
Monthly payments are based on the car’s price and the contract length. At the end of the term, you’ll need to make a final balloon payment if you want to keep the car. Some agreements offer an optional final payment, which is a lower lump sum if you plan to trade in or return the car. Be aware of early termination charges and mileage limits to avoid unexpected costs.
What is an Example of PCP Car Finance Agreement?
Imagine you’re financing a car worth £10,000 over three years with a £1,000 deposit and £200 monthly payments. At the end of three years, you can make a final balloon payment of £3,000 to keep the car or return it without further payments. If you keep the car, your total cost would be £13,000, including the deposit, monthly payments, and the final payment. Always consider these factors to ensure a PCP agreement aligns with your financial situation.
What Are The Options Once The PCP Finance Deal Comes to an End?
As your PCP finance deal nears its end, you have several options. You can make the final balloon payment to keep the car, trade it in for a new one, or return the car and walk away. If you decide to keep the car, be prepared for the final payment. Trading in the car allows you to use any equity towards a new vehicle. If returning the car, be mindful of any early termination charges.
How Will You Determine The Amount You Can Borrow for Cars on PCP?
Determining your borrowing amount for a PCP finance agreement involves several factors. Typically, you need a deposit of 10% of the car’s value. For a £10,000 car, this means a £1,000 deposit. Monthly payments are based on the remaining value after the deposit. For instance, financing £9,000 over three years might result in £250 monthly payments. At the end of the term, you can make a final balloon payment or return the car. Consider all aspects before committing to ensure the agreement fits your financial capabilities.
What Are The Advantages of Car Finance on PCP?
PCP car finance offers several advantages. You can spread the cost of the car over time, make lower monthly payments by deferring some costs to the final balloon payment, and trade the car in for a new one at the end of the agreement. Additionally, PCP finance may offer lower interest rates compared to other financing options.
How Does Car PCP Finance Differ From PCH and HP?
Car PCP finance differs from Personal Contract Hire (PCH) and Hire Purchase (HP) in several ways. PCP deals typically last for two to three years, whereas PCH and HP can extend up to five years. PCP requires a deposit, but PCH and HP may not. With PCP, you have the option to trade in the car at the end, which is not always possible with PCH and HP. Interest rates with PCP may also be more favorable.
Who Offers PCP Finance Deals?
Many lenders offer PCP finance deals, including Ford Credit, Volkswagen Bank, BMW Financial Services, Audi Financial Services, and Mercedes-Benz Financial Services. Compare offers from various lenders to find the best deal for your needs. Fast Easy Finance, an independent car finance broker, can help you find the best PCP finance deals from a range of lenders. Contact them today to get started.
What You Need To Get PCP Finance Car With Fast Easy Finance?
To secure a PCP finance car with Fast Easy Finance, you’ll need a 10% deposit of the car’s value, a good credit score, and a steady income. If you meet these criteria, contact Fast Easy Finance to find the best PCP finance deals and get into your new car quickly.
Conclusion
Car finance PCP can be an excellent option for spreading the cost of a new car. However, it’s crucial to compare offers from different lenders and understand all terms and conditions before committing. Fast Easy Finance can help you find the best PCP car deals in the UK. Contact them today to start your search and find the right car finance option for you.
