Personal Contract Purchase (also known as PCP) could allow you to get your hands on a new car without needing to stump up a significant sum of cash all at once.
One of the major selling points of a PCP car finance car deal is that it could mean you can get your hands on a new or nearly new car than you could not otherwise afford. It'll be more reliable than an older car, require less maintenance and, like for like, will be cheaper to run. It'll also likely come with a warranty for ultimate peace of mind.
Something to consider though is that a PCP car finance deal represents a significant long-term financial commitment because you pay for the car over monthly instalments, so it might not be for everyone.
While PCP car finance deals are predominantly offered on new cars, you'll also find them on used cars for sale as well or via a third party plan which you then use to a new or used car.
A Personal Contract Purchase (PCP) is essentially a long term financial agreement which usually takes the form of a lump sum deposit followed by smaller monthly payments with the option to buy the car – with a final balloon instalment – at the end of the agreement.
How does a PCP car deal make financial sense for the dealer, manufacturer or finance company? Well, it's because your lump sum and monthly payments cover the cost of the car's depreciation as well as paying the lender a relatively small income on the loan.
It sounds like complicated maths but the FCA (Financial Conduct Authority) requires that everything is clearly broken down when looking at a PCP car deal. So, as well as knowing you're initial deposit, monthly payments and ballon sum final payment, the length of the agreement will also be clearly labelled as will the interest you're paying on the finance, the agreed annual mileage and the cost per mile if you exceed it.
Perhaps the most revealing figure is the offer price – it shows you exactly what you're paying versus the on-the-road price if you were buying the car upfront.
You can check out the latest and best PCP car deals below, while further down the page you'll find more info about PCP deals, from the deposit needed to the optional final payment you can make.
The Dacia Sandero is a famously affordable small car and it is now available for a temptingly small monthly payment. The deposit is a manageable £3449, too.
The Dacia Duster is one of the best value cars you can buy and the Essential TCE 90 front-wheel drive model will cost you less than £200 per month. A great family SUV if you're on a budget.
The Jeep Avenger is an exciting new model from the American 4x4 brand, which brings its rugged appeal to the small SUV sector. It's available in EV and hybrid guise, but the most affordable is the 1.2-litre turbo petrol version – made even more appealing with a £249 a month PCP deal that includes a £1250 deposit contribution.
The Suzuki Vitara is a family-friendly SUV on a budget. It's now even more appealing thanks to a £3000 customer saving that takes monthly payments for the 1.4 Boosterjet SZ-T, on a four-year PCP, down to £259. Even the deposit is manageable at just over £5000.
The BYD Dolphin is an able and affordable new electric car, that is even more accessible thanks to a striking low deposit deal. The 0.5% representative APR is very low, and a further discount of £1463.89 helps make this a very competitive overall package.
The Volvo EX30 is a really exciting new small electric car from the stylish and safe Swedish brand. It's super-affordable even without any deals – making this £295 a month PCP car deal, which includes a £750 saving, a tempting one. The 2.9% representative APR is very competitive, too.
The Honda HR-V is a small SUV that has big car space on the inside thanks to clever design and packaging. It has a fuel-saving hybrid engine as standard, with a £299 per month finance deal adding further appeal. This is helped by a £2500 Honda deposit contribution, which means the customer deposit dips under £5k.
Honda's very first electric SUV is still pretty new to the market, but you can drive away an Elegance model for less than £300 a month. And after cutting prices by £5k Honda is now chucking in a whopping £3000 deposit contribution, with a five-year service plan, warranty and roadside assistance thrown in as well.
This Fiat 500 Electric deal proves that not all EVs are expensive. It's currently available on a 0% APR PCP finance deal. The choice Icon model, fitted with a beefy 42kWh battery, is available for £299 a month. The deposit is just £999, and Fiat adds in a £3000 'e-Grant' price cut.
The Fiat 600e is a new all-electric car from the famed Italian brand. Unlike the smaller Fiat 500e, the Fiat 600e is focused on families, with five-door practicality and a decent boot. It's available for £399 a month with a low £1999 deposit, thanks to a £3000 Fiat e-Grant saving and additional £750 deposit contribution.
The Ford Puma is one of the very best small family SUVs, and you can now have one outside your home for just £340, with a very low rate of APR. That price will get you a Titanium 1.0 125 Ecoboost model with the costs spread over three years.
The new Ford Explorer electric SUV is now open for ordering. The first cars will arrive in September and the company is aiming to launch with a bang thanks to an appealing PCP deal with 0% APR. It means those who can find the £9881 deposit, and £380 a month, won't pay a penny in interest over four years.
The Tesla Model 3 is a must-have electric car that has been freshly facelifted for 2024. It is more refined, better built and, overall, much nicer to drive. For those who can afford an £11,600 deposit, the entry-level model is now on offer for a tempting £342 a month on a four-years PCP deal.
The Audi A3 Sportback is a stylish premium family hatchback with a sporty, sophisticated image. This 35 TFSI Sport model comes with a generous £3250 Audi deposit contribution, which helps take monthly payments down to £345 over a four-year PCP deal. The annual milage is a generous 10,000, too.
Audi's impressive premium electric SUV is one we really like at heycar, even before there's a cracking deal on it. An Audi Q4 e-tron Sport 82kWh with metallic paint can be yours for just £449 a month, with a huge deposit contribution of £5750 thrown in.
The Lexus UX 300e is a posh electric small SUV that recently received a 40% boost in EV range to a handy 279 miles. It is currently available with 0% APR finance, spread over four years. Monthly payments are kept in check by a generous £4500 Lexus deposit contribution, and owners can cover up to 8000 miles a year.
Mazda's ultra-stylish CX-5 has been around for a while now, but think it's something of an underrated gem as far as family SUVs go. Great to drive and with a comfortable interior, you can pick one up for £369 a month with Mazda's latest deal, which throws in a £2000 deposit contribution.
The BMW 1 Series is a sporty hatchback alternative to the Audi A3 Sportback that is great to drive. A 118i version, in choice M Sport trim, can be yours for £359 a month on a four-year PCP, with a low representative APR of 3.9%. This means you pay less overall than the Audi deal above, despite Audi's generous deposit contribution.
The initial payment for a Personal Contract Purchase (PCP) used to represent around 10 per cent of the car's value.
However, some recent offers have substanitally reduced that amount, even to the same amount as subsequent monthly payments. Manufacturers sometimes contribute to the deposit though, although be aware that this can typically involve your acceptance of a higher interest rate. To get a good handle on the financial implications, compare the On-The-Road (OTR) price with the Total Amount Payable (TAP) for a clear-cut understanding of the costs.
The lion's share of the expenditure in a PCP car deal agreement comes from the monthly instalments, spread over periods of two to four years. In general, opting for a shorter contract results in reduced interest payments.
The agreed annual mileage limit is crucial as it determines the vehicle's value at the contract's end. Exceeding this limit results in extra charges, typically around 10p per mile. To avoid unexpected costs, it's advisable to set a realistic mileage limit when arranging your agreement. In most PCP car deals, annual mileage is capped at 10,000 miles, but check the terms to ensure this is not less.
At the end of a PCP car deal, a large payment is due if you want to keep the car. This payment is based on how much the car is worth at the end, plus any extra costs – for example, if you went over your mileage limit.
You don't have to make this payment – you can return the car or swap it for a new one. If the car is in really good shape and hasn't been driven a lot, it might be worth more than this final payment, and that extra value can go towards your next car. If you choose to pay and keep the car, you'll be the only owner named on its V5C logbook. But remember, opting to keep the car usually comes with an extra fee.
With a PCP deal, you have to stick to certain rules. For example, you can't drive more than the agreed miles, and you need to service the car on time, as recommended by the manufacturer, and take good care of it. If the car gets damaged, you'll need to fix it before the end of the deal.
It's also a good idea to think about getting Guaranteed Asset Protection (GAP) insurance. This insurance helps cover the cost if your car is written off and it's worth less than what you still owe on the PCP agreement.
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