PCP Car Finance - Everything you need to know

Financing a new car from car dealership

What is Personal Contract Purchase?

A PCP is like a long-term rental that allows you to use the car until your contract ends. You can pay a deposit and monthly repayments over a set period (usually three to five years). Once your contract ends, you have three options:

  1. Return the car
  2. Obtain ownership of the vehicle by paying the Guaranteed Minimum Future Value (GMFV) (“balloon payment”).
  3. Use the resale value towards buying a new car.

How does PCP work?

To get a personal contract purchase, you will need to pass a credit check. The company will need to make sure that you’re the type of person who pays their bills on time. You will also need to have enough money to pay the deposit upfront. You will then have a monthly payment for three to five years. At the end of the contract, you will not own the car. If you would like to keep the car, you can buy it by paying the ‘balloon payment’, which is normally a few thousand pounds. You can use the resale value towards buying a new car, however, you’ll often need to stay with the same dealer.

  1. You’ll need to pass a credit check
  2. Pay your deposit
  3. You can use the car (please note, you don’t own it yet) while making monthly payments for the duration of the contract.
  4. When the contract is up, you’ll need to decide - keep, return, or use its value to act as a deposit on a new PCP.
Picture of the inside of a new car brought through PCP car finance

PCP Car Finance – Pros and Cons:


  • PCP gives you the option to either keep the car or give it back.
  • The monthly payments tend to be lower than other agreements.
  • The payments are fixed over the entire period, so you don’t need to worry about the payments increasing.


  • Interest on the GMFV is included in the monthly payments.
  • If you want to keep the car, you will need to pay the GMFV.
  • If the car is returned in a different condition (for example excess mileage or vehicle damage), there will be charges.

Please note, one in five people who take out a PCP deal say they can’t afford the final payment. Always check how big your balloon payment so you don’t feel like you’ve wasted the investment made.

Mis-sold PCP Car Finance

Unknown to customers buying vehicles, lenders systematically incentivised brokers and car dealers to charge their customers higher interest rates. So, they could receive higher commissions themselves. It is estimated that hundreds of thousands of motorists might have been mis-sold finance packages, costing consumers up to £300m a year.

You may have been mis-sold car finance if you received poor advice about your financing options or if you were not sufficiently made aware of the various commissions being charged within your agreement.

PCP Claimsline - Claims Management Company Manchester

If you've been mis-sold car finance Manchester, we can help you get your money back. Our team of experts will fight for the compensation you deserve.

Fill in our short from and someone will be in touch within 20 minutes. Alternatively, you can contact us using the details below:

Tel: 0333 358 2131
Email: info@pcpclaimsline.com
Website: https://www.pcpclaimsline.com/
Address: Bank Chambers, 93 Lapwing
Lane, Manchester,
United Kingdom,
M20 6UR