What is PCP Finance?

PCP stands for Personal Contract Purchase. It is a popular type of car finance that can give you lower monthly payments compared with some other finance options.

Instead of paying off the full value of the car during the agreement, part of the cost is deferred until the end. This final amount is often called the optional final payment or balloon payment.

At the end of the agreement, you usually have three choices: keep the car, part-exchange it, or hand it back. Mileage and condition rules apply.

How PCP works

  • Choose the car you want to finance.
  • Agree your deposit, term and estimated annual mileage.
  • Make fixed monthly payments during the agreement.
  • At the end, choose whether to keep, part-exchange or return the car.
  • To keep the car, you pay the optional final payment.

Why choose PCP?

  • Lower monthly payments compared with some other finance options.
  • Flexible options at the end of the agreement.
  • Good for drivers who like changing cars regularly.
  • You can plan around fixed monthly payments.
  • You do not have to decide whether to keep the car until the end.

PCP vs HP: What’s the difference?

PCP and HP are both common ways to finance a car, but they work differently. The right option depends on how you want to pay, how long you plan to keep the car and whether you want flexibility at the end.

Feature PCP HP
Monthly payments Usually lower, because a final payment is deferred until the end. Usually higher, because you are paying off the full car value over the term.
End of agreement You can keep the car, part-exchange it, or hand it back. Once all payments are made, you own the car.
Ownership You only own the car if you pay the optional final payment. You own the car after the final payment and any option-to-purchase fee.
Mileage limits Yes. You agree an annual mileage at the start. Excess mileage charges may apply. Usually no set mileage limit.
Vehicle condition If handing the car back, fair wear and tear rules apply. Condition is less relevant if you plan to keep the car.
Best suited for Drivers who want lower monthly payments and flexibility at the end. Drivers who want straightforward ownership at the end of the agreement.

Finance is subject to status. Terms and conditions apply. Mileage limits, vehicle condition standards and excess mileage charges may apply with PCP agreements. Concierge Motor Finance acts as a broker, not a lender.