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What is Personal Contract Purchase (PCP)?
Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used car. It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months. What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the car, and not its entire value, over the course of the term.

How does PCP actually work?​

Finance

Before your PCP agreement begins, you’ll be assessed on your ability to pay the monthly instalments and whether or not you’re a credit risk.

Assuming both of these check out, you’ll be required to pay a deposit, which is typically 10% of the vehicle’s value.

You’ll now be able to use the car, although you won’t own it until all payments have been made.

Before the final ‘balloon’ instalment is due, you can decide to:

  • Pay the final instalment and keep the car
  • Return the car and have nothing left to pay
  • Use the car’s equity as a deposit for a new PCP agreement

What are the advantages of PCP?

  • It enables you to drive a new car that you might not otherwise be able to afford.
  • PCP monthly payments tend to be lower than Hire Purchase payments (for an equivalent vehicle) because you’re financing the car’s depreciation as opposed to paying off its total value.
  • It’s flexible; at the end of the agreement, you can choose to keep the car, hand it back or start a new PCP agreement (and select a new vehicle).

What should you consider when option for a PCP?

  • Assuming you wish to own the car, it won’t be yours until you’ve paid the final (larger) ‘balloon’ instalment.
  • You risk losing the car if you default on your repayments.
  • PCP deals tend to be available for more expensive vehicles.

Can I settle my PCP agreement early?

If you want to settle early and keep your car, please contact us and ask for a settlement figure, which will include the final ‘balloon’ payment. Once these are paid, the car is yours.

Please note:

  • Extra fees for ending your PCP deal early may apply
  • You may be required to pay an excess mileage charge if you’ve exceeded your mileage agreement
What is Hire Purchase (HP)?
​Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright. ​

How does HP actually work?​

You’ll be required to pay a deposit, which is typically 10% of the total value of the vehicle. You’ll then need to make monthly payments for the length of the agreement.

Please note that your ability to pay monthly instalments for the full term of your agreement will be assessed and your credit history will be checked.

What are the advantages of HP?

  • Flexible repayment terms (between one and five years).
  • Fixed interest rates.
  • If you have a low credit rating, it’s often easier to get an HP deal than it is an unsecured loan.
  • Usually, mileage restrictions don’t apply with HP.
  • Unlike PCP, there’s no final ‘balloon’ payment.

What should you consider when option for a HP?

  • The car isn’t yours until the final payment is made.
  • If you don’t keep up with payments, the car could be taken away from you.
  • HP monthly payments are typically higher than PCP monthly payments because you’re paying off the vehicle’s total value as opposed to its depreciation.

Can I settle my HP agreement early?

Yes, as long as you pay the settlement fee as laid out by the finance provider.

What is APR?

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APR stands for Annual Percentage Rate, and it includes charges and arrangement fees that are added to a car’s selling price.

Will I be approved for car finance?

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Your eligibility for finance is based on your credit profile, and it takes the form of a soft credit check which won’t affect your credit rating. Get in touch with us today to see if you're eligible for finance.

Can I get car finance if I have bad credit?

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You may be eligible for car financing with us if your credit history is not the best. We’ll look at your personal circumstances, including your age, employment status, annual income, loan size and credit history.

If successful, we’ll provide you with details of the exact details of interest rates and monthly repayments that are available to you.

What’s the difference between a soft credit search and a hard credit search?

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A soft credit search (which is used with our eligibility checker) is a basic background check that won’t affect your credit rating.

A hard credit search is completed only if you apply for financing. A record of the search will be added to your credit profile and may affect your overall score, albeit on a likely temporary basis.

We’ll only complete a hard credit search when absolutely necessary – and only after seeking your express permission.