How it works
Personal Contract Purchase – Hire Purchase (or ‘PCP HP’) is our most popular PCP product and has become increasingly popular in recent years for its cost effectiveness and its flexibility.
In essence, this is like a hire purchase agreement but with the option of a final ‘balloon’ payment at the end of the agreement if you wish to own the car.
The amount of this payment is calculated at the start of the agreement based on our prediction of the future value of the vehicle at the end of the agreed contract term and mileage. This is referred to as the Minimum Guaranteed Future Value (‘MGFV’) and is guaranteed.
Your payments are based on the difference between the original purchase price and the MGFV. As you aren’t paying to own the car itself, you benefit from lower regular monthly instalments than a comparable fully amortised HP agreement over the same term. You can also claim authorised mileage allowance payments (AMAPs) from your employer and if you are not paid the full AMAPs allowed by the Government, you can claim tax relief on the difference.
Maintenance can also be included with breakdown cover. However, you will need to sort comprehensive insurance, which is not included in the agreement.