Compare PCP Car Finance Deals

Yes, PCP car finance agreements are available for both new and used cars. Keep in mind that different lenders will have different eligibility criteria and may only offer PCP loans for cars less than five years old.

The PCP car finance process has three steps:

1. Once you’ve applied for a PCP loan and found a deal that suits your circumstances and budget, you can put down a deposit. No deposit PCP deals are available, but putting down at least 10% upfront could reduce the amount you need to borrow and improve your eligibility.
2. You’ll then make fixed monthly repayments throughout your loan term. Most PCP loan terms last between two and four years. These payments will cover the car’s depreciation – the amount of value it will lose – during the agreement.
3. At the end of the agreement, you can hand the car back and walk away, buy the car by paying the balloon payment, or trade it in as a deposit in a new deal.

The cost of your PCP car finance will depend on the car you buy, the deposit amount, your credit score, and loan term length.

As you don’t need to borrow the full purchase price of the car, PCP can be a more affordable way to finance a car than other loan options.

However, if you want to own the car at the end of your loan term, you’ll need to make a large one-off payment. This lump sum is the balloon payment and can be several thousands of pounds.

To reduce the cost of your PCP car finance, you could:

• Put down a large deposit – the more you put down upfront, the less you’ll need to borrow.
• Opt for a shorter loan term – while a long term can come with lower repayments, you’ll likely pay more interest over time.
• Improve your credit score – an excellent or good credit score may make you eligible for a lower APR or interest rate.

A balloon payment is a term used to describe the amount you need to pay to become the car’s owner at the end of a PCP deal. It is also known as the GMFV or Guaranteed Minimum Future Value. The GMFV is calculated at the start of your loan and is the amount the lender thinks the car will be worth at the end of your agreement.

A personal loan works differently from a PCP or HP loan, as you’ll become the car’s owner as soon as you use the loan to pay the car’s seller. Personal loans are also usually unsecured, which means you might need to have a good or excellent credit score to be approved. As you’ll immediately become the car’s owner, your monthly repayments can be higher than on PCP. However, you won’t have to worry about any mileage restrictions, and you can sell the car whenever you like (if you keep up with your payments).

Yes, you can end a PCP deal early in two different ways. If you want to end your PCP loan and become the car’s owner, you can request a settlement figure from your lender. This figure is the amount you need to pay to clear the loan in full, including your outstanding repayments and the balloon payment.

If you can’t afford to pay the settlement figure or want to hand the car back early, you can opt for voluntary termination. Under the Consumer Credit Act 1974, you have the right to voluntary termination once you’ve paid at least 50% of the total amount owed on the loan. With a PCP agreement, this includes the balloon payment. You don’t have to wait until you’ve reached this threshold as long as you pay the difference.