PCP car finance allows you to spread the cost of a new or used vehicle through fixed
monthly repayments, with the choice to return, keep or part-exchange the car at the end of
the agreement. It can suit drivers who want access to a newer vehicle without committing to
ownership from the outset.
Streamline Car Finance searches a panel of lenders to help identify PCP options based on
your chosen vehicle, deposit, annual mileage and monthly budget. Our team will explain the
repayment structure, optional final payment and end-of-term conditions clearly, so you
understand the agreement before making a decision.
Request a free, no-obligation quote using the form below or call 0161 968 3449 to speak to
our team.
What is PCP Car Finance?
Personal Contract Purchase, commonly shortened to PCP, is a vehicle finance agreement
involving an initial deposit (can be £0), fixed monthly repayments and an optional final
payment.
Unlike Hire Purchase, the monthly repayments do not cover the full cost of the vehicle. Part
of the amount is deferred until the end of the agreement, based on the vehicle’s predicted
future value. This is known as the Guaranteed Minimum Future Value, or GMFV, and is used
to calculate the optional final payment.
A typical agreement includes:
● An initial deposit, although no-deposit options may be available
● Fixed monthly repayments over an agreed term
● A set annual mileage allowance
● An optional final payment
● Three main choices at the end of the term
Your interest rate and monthly repayment will depend on your circumstances, the chosen
vehicle and the lender’s assessment. All applications are subject to status and affordability
checks.
How Does A PCP Agreement Work?
Choose Your Vehicle And Deposit
First, choose the vehicle you want to finance. A typical PCP deposit is around 10% of the
vehicle’s price, although smaller deposits and no-deposit options may be available through
selected lenders.
Paying a larger deposit reduces the amount being financed, which will usually lower your
monthly repayments. You should still keep enough money available for insurance, servicing
and other vehicle costs.
Agree Your Term And Mileage
PCP agreements commonly last between two and four years. You will also agree an annual
mileage allowance based on how far you expect to drive.
It is important to choose a realistic mileage allowance. Your expected mileage helps
determine the vehicle’s predicted future value and can affect your monthly repayments. If
you return the vehicle above the agreed limit, an excess mileage charge may apply. The
cost per additional mile will be set out in your agreement.
Make Fixed Monthly Repayments
Your repayments are calculated using several details, including:
● The vehicle’s cash price
● Your initial deposit
● The length of the agreement
● Your annual mileage
● The interest rate
● The vehicle’s expected future value
The payments remain fixed throughout the term, helping you plan your monthly spending.
Decide What Happens At The End
When the term ends, you will usually have three options:
- Return the vehicle, provided it meets the lender’s mileage and condition
requirements - Keep it by paying the optional final payment and any purchase fee
- Part-exchange it and use any available equity towards another vehicle
If the vehicle is worth more than the amount needed to settle the finance, the difference may
be available as equity towards another vehicle. This is not guaranteed and will depend on
the vehicle’s market value at the time.
Charges may apply if you return the vehicle with excess mileage or damage beyond the
lender’s fair wear and tear standards.
What Are The Main Advantages?
Lower Monthly Repayments
A main reason people choose PCP car finance is that part of the vehicle’s value is deferred
until the agreement ends. This can make the monthly repayments lower than those on an
equivalent Hire Purchase agreement.
You should compare the total amount payable rather than focusing only on the monthly
figure. A lower monthly repayment does not always mean that the agreement costs less
overall.
Flexible End-Of-Term Choices
You do not need to decide at the beginning if you want to own the vehicle permanently. At
the end of the term, you can return it, pay the optional final amount or consider changing to
another model
Access To Newer Vehicles
Deferring part of the vehicle’s cost can reduce the monthly repayments compared with
financing the full purchase price. Drivers considering an electric or hybrid model may also be
able to spread the cost through electric car PCP.
The available terms will depend on whether the vehicle meets the lender’s requirements for
age, mileage, value and expected depreciation.
Predictable Payments
The agreed monthly repayment remains fixed throughout the term. Running costs such as
insurance, servicing, repairs, road tax and fuel or charging are separate and should be
included in your wider motoring budget.
Who Is PCP Car Finance Suitable For?
This type of agreement can work well for drivers who enjoy changing their vehicle every few years and do not necessarily want to own it at the end. It may also suit people who prefer predictable repayments and can estimate their annual mileage accurately.
It may be less suitable if you expect to cover a very high or unpredictable number of miles, want to modify the vehicle or know that you wish to own it outright.
Points To Check Before Applying
Before entering an agreement, check:
- How many miles you expect to drive each year
- The size of the initial deposit
- The monthly repayment and interest rate
- The optional final payment
- Any excess mileage charges
- The lender’s fair wear and tear standards
- The total amount payable
- If the payments will remain affordable for the full term
You should also think about how your circumstances could change during the agreement. A longer term may reduce the monthly figure, but it also means committing to payments for a longer period.
Finance For Different Types Of Vehicle
SUVs And Saloon Cars
An SUV can provide additional passenger and luggage space, while a saloon may suit regular commuting and longer journeys. Streamline can arrange Mercedes car finance alongside options for Audi, BMW, Land Rover and other manufacturers.
The vehicle must meet the chosen lender’s criteria, so its age, mileage, condition and purchase price will be assessed as part of the application.
Electric And Hybrid Cars
Before selecting an electric or hybrid vehicle, check its real-world range, charging requirements and suitability for your regular journeys.
You should also look at the availability of home and public charging, expected servicing costs and the battery warranty provided by the manufacturer.
Prestige And Performance Cars
PCP may be available for selected prestige, luxury and performance vehicles. Lenders will review the applicant’s circumstances alongside the vehicle’s price, age, mileage and predicted future value.
These factors can affect the deposit, monthly repayments and optional final payment. Our team can explain the available terms before you apply.
Vehicles For Business Use
Company directors and business owners may need a reliable vehicle for client meetings, travel between sites or other work-related journeys. Business PCP offers fixed repayments and a choice of options when the term ends.
The suitable structure will depend on how the vehicle is used and who will own it. Independent tax advice may be required before taking out an agreement through a limited company.
Motorhomes And Campervans
Finance may be available for selected motorhomes, campervans and leisure vehicles. Eligibility varies between lenders, so our team can discuss the available motorhome finance options for your chosen vehicle.
Why Choose Streamline Car Finance?
Streamline Car Finance provides personal support throughout the application process. We take time to understand the vehicle you want, how you plan to use it and the monthly budget you can comfortably manage.
Customers receive:
- Access to a panel of vehicle finance lenders
- Clear explanations of rates, terms and repayments
- Options for new and used vehicles
- Support with personal and business applications
- A free, no-obligation quotation
- Help throughout the application and vehicle purchase
Streamline Car Finance is a credit broker, not a lender. All finance applications are subject to status, affordability checks and the lender’s terms.
Get A Finance Quote
Speak to Streamline Car Finance about PCP car finance suited to your chosen vehicle, expected mileage and budget. Contact us for a free, no-obligation quote or call 0161 968 3449 to speak to our team.
Frequently Asked Questions
Yes, no-deposit agreements may be available through selected lenders, subject to status and affordability checks. Your monthly repayments may be higher because you will be financing a larger amount.
The lender may charge an excess mileage fee if you return the vehicle with more miles than agreed. The charge per additional mile will be stated in your finance agreement.
No. The finance provider owns the vehicle during the agreement. You will only become the legal owner after making all required payments, including the optional final payment and any applicable purchase fee.
You can request an early settlement figure from your lender. This confirms how much must be paid to end the agreement. If you want to change vehicles, its current value can be compared with the settlement balance.
There is no single credit score used by every lender. Providers will consider your credit history, income, existing commitments and affordability. A stronger credit profile may provide access to more competitive rates, although options may also be available for applicants with previous credit issues.