PCP
Car Finance

Q: Are Personal Contract Purchases worth it?

PCP could be a great option if you prefer low monthly payments, don’t drive long distances, and enjoy changing cars regularly. However, if owning your car outright and avoiding mileage limits is more important to you, PCP may not be the best fit. The final "balloon payment" and extra charges for exceeding mileage limits could make a different finance option more worthwhile for your needs.

Q: Do you need good credit for PCP?

Good credit allows access to the best PCP finance rates but near prime and bad credit applicants can still get deals. Specialist lenders assess applicants individually so speak to a broker about tailoring PCP to match your credit profile.

Q: What happens at the end of the PCP agreement?

At the end of your PCP contract, you have three options: Pay the outstanding balloon payment to own the car Use equity in the car as a deposit for a new PCP deal Return the car to the finance company with nothing further to pay (subject to condition and mileage)

Q: Can I end my PCP finance contract early?

Yes, you can end your PCP contract early, but it’s important to check your contract. Most agreements include an early repayment or cancellation fee, so think about whether ending it early is worth the extra cost.

Q: What can I do if I am falling behind with PCP payments?

If you’re struggling to keep up with PCP payments, reach out to your lender right away. They may be able to work out an arrangement to help. Keep in mind that missed or late payments can lead to extra fees, and the lender could repossess the car if payments remain unpaid.

Q: What else to consider before PCP finance?

Ensure you can afford the monthly repayments comfortably and pick an annual mileage limit that exceeds your needs. Check if fees apply for late payments or exceeding the mileage. Also consider insurance, maintenance and any other running costs.

Q: Will PCP affect my credit score?

PCP finance shows on your credit file so make sure payments are made in full and on time. Provided the agreement is managed well, PCP can help build your credit score over the duration of the contract.

Q: Are there additional PCP charges?

Check your agreement for any fees like arrangement, documentation or late payment fees. Excess mileage charges also apply if you exceed pre-agreed annual limits. Maintenance, roadside assistance or insurance cover sold alongside PCP will have separate fees too.

Q: Can you modify a car on PCP?

To modify a car under a PCP agreement, you’ll typically need permission from the finance company. While you’re the registered keeper, the finance company remains the legal owner until the finance is fully paid off.

Q: Do I need to insure my car if it’s on a PCP deal?

Yes, you’ll need to insure a car bought with a PCP agreement, just as you would if you owned it outright. Some dealerships may offer insurance as part of the deal, but don’t assume this is included. Most finance companies require a fully comprehensive insurance policy. This ensures that, if the car is damaged or written off, the finance company has the assurance that the loan will be repaid.

My monthly budget is

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Free eligibility check with no impact on your credit.

Lower monthly payments — only pay for depreciation

Flexible end-of-term — return, buy or part-exchange

PCP (Personal Contract Purchase) spreads a car's cost over 24-48 months, with monthly payments covering only depreciation — not the full value.

At 14.9% APR representative, a £7,500 car costs from £113/month over 60 months, with an optional balloon payment of £4,875 to own it at the end. Return it, buy it, or part-exchange — the choice is yours. Car-Finance matches you with 15+ UK lenders, from 8.9% APR.

Deposit: optional (10-20% of the car's value typically reduces monthly payments)

Term: 24-60 months

Rates: from 8.9% APR (representative 14.9% APR)

End of term: return the car, pay the balloon payment to own it, or part-exchange — no obligation to buy

Mileage: annual cap agreed upfront; typical excess charge 6–15p per mile over limit

Last Updated: April 2026

How to get PCP car finance?

Getting a car loan is easy - you just need to follow a few steps to get the most favourable offer possible

Apply for a loan

Tell us what car you want, how much you need to borrow, and what monthly payment fits your budget. Once you apply for PCP car finance, we'll match you with the most suitable deal from our panel of UK lenders.

Get approved for an PCP car finance deal

Once your finance agreement is approved, you can choose a used car that fits your budget. You agree to a fixed monthly payment as part of the contract, and the finance company secures the loan against the car. We'll carry out full checks on the car and the paperwork before you sign anything, so you know exactly what you’re committing to.

Drive away the same day

Arrange same-day collection or delivery. Drive off with confidence. You make regular monthly payments over the agreed term. Once all payments are complete, and any final amount is settled, the car becomes fully yours.

Our Lenders

We work with over 15 lenders offering 100+ HP and PCP deals so that you could have the best offer.

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PCP car finance calculator

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Your estimated examples

These estimates are subject to credit checks, and may change if you do apply for finance.

PCP £113.36/pm

HP £174.39/pm

Loan amount£7,500.00

Length of Loan60 months

Monthly payment£0

Interest rate11.9% APR

Optional final payment£0

Amount of interest£0

Total payment£0

Can I get PCP car finance?

Yes, you can. At Car-Finance, we’re a credit broker, not a lender. We work with trusted providers who offer PCP as a flexible car finance agreement from 8.9% APR (representative 14.9% APR).

You’ll go through a soft credit check first. And you’ll need to provide some basic details to match the finance amount and the length of your contract. Some finance company’s offers may suit you better if your credit score’s strong, but we’ll help you secure the best fit.

We run a soft credit check first — no impact on your score. We work with 15+ UK lenders, including specialists for bad credit and low deposit applications.

What is PCP (Personal Contract Purchase) and how does it work?

PCP (Personal Contract Purchase) is a type of car finance that offers flexible options at the end of the term. You can buy the car outright, hand it back, or use any equity to change your car with a new PCP deal.

You won’t repay the full value of the car. Instead, your loan covers the difference between the cost of the car and its guaranteed minimum future value (what the finance provider expects the car will be worth later). This is known as the depreciation of the car.

Because of this structure, monthly PCP payments are often lower than other finance methods. However, the car isn’t yours unless you purchase the car at the end.

PCP might work well if you drive fewer miles, prefer lower payments, and want a car that holds its value. And if you want to keep the car, you can just buy the car outright at the end.

How do PCP finance payments work?

PCP gives you a flexible car finance option with lower monthly costs compared to buying a car outright. Here's how PCP car finance work in practice.

Rates start from 8.9% APR (representative 14.9% APR). Your exact rate depends on credit profile, deposit size, and chosen term.

You take out a four-year PCP contract on a £20,000 car at 14.9% APR representative. You put down a £2,000 deposit and make £250 monthly payments. At the end of a PCP agreement, you can pay an optional balloon payment (GMFV) of approximately £7,000 at the end to own the car, or hand back the car.

You could also use any remaining value to start a new PCP agreement. Or simply hand the car back if you don’t want to buy the car.

Your monthly payments will depend on:

Your deposit amount
The finance amount you borrow
The finance term you choose
The start of your contract
Your annual mileage
The future value of the car
What the car is worth at the end
The interest rate charged
The Guaranteed Minimum Future Value (GMFV) set by the lender at the start of the agreement

This structure makes PCP one of the most flexible options if you're comparing vehicle finance deals.

Comparing PCP with other finance options

Finance features	Hire purchase (HP)	Personal contract purchase (PCP)	Personal loan	PCH / Leasing
Requires initial deposit	Optional (10–20% recommended)	Optional		typically 3-6 months' equivalent as initial rental
Car is yours at the end of the agreement		Optional
Fixed monthly payments
Optional balloon (final) payment				N/A — you don't buy the car
Avoid excess mileage charge (mileage limits)				excess mileage charges apply
Secured against an asset (e.g. a car)				N/A
Support with vehicle issues				N/A
Best suited for	All types of drivers	All types of drivers	All types of drivers	Drivers who want lower monthly costs without ownership

The pros and cons of PCP car finance

Benefits

Lower monthly repayments: PCP payments cover only the car's depreciation, not its full value — so monthly costs are typically 20-30% lower than HP on the same car.
Fixed interest rates: Your rate is locked in at the start, so monthly payments never change over the agreement term. This makes budgeting straightforward.
Change cars every 2-4 years: At the end of your term, you can simply start a new PCP deal on a different car — giving you access to the latest models and technology.
Flexible end-of-term options: Return, buy, or part-exchange — no obligation to commit to ownership until the final payment.
Soft credit check, no impact on your score: We check your eligibility with a soft search first. Only a hard check is performed when you formally apply — no footprint during the quote stage.
Bad credit considered: Specialist lenders on our panel work with applicants across all credit backgrounds. A poor or limited credit history does not automatically disqualify you.

Disadvantages

You do not own the car until the final balloon payment: The finance company holds legal title throughout the agreement. If you return the car at the end, you retain no equity.
Mileage limits — excess charges apply: Agreements include an agreed annual mileage cap. Exceeding it typically costs 6-15p per additional mile, which can add up significantly over a full term.
Repaying the loan early can be expensive: Early settlement may require paying a settlement figure that includes remaining interest charges. Check your agreement before settling early.
Balloon payment required to own the carThe optional final payment (GMFV) can be a significant lump sum — typically 25–40% of the original car value — which requires separate financial planning.

What do you need to apply for PCP car finance

To apply for car finance you need to

Your name. This is your personal information that you provide on your auto loan application.
Date of birth and nationality. This data is necessary to determine your creditworthiness.
Your recent address history. This information helps the lender assess your stability.
Your employment status. Indicates your current job and income.
Your income and expenses. Information about your financial situation.

Requirements

Be aged 18–79 years old (varies by lender)
Deposit optional; 10–20% typically recommended
Receive a monthly income of £1,000 or above
Self-employed and freelancers accepted — 3 months' bank statements or SA302 required

Is PCP car finance right for me?

PCP suits you if:

You want lower monthly payments to drive a newer car rather than buying outright
You plan to change cars regularly, such as every three-year PCP term
You drive average mileage within the agreed limits
You’re comfortable not owning the car unless you pay the final amount

PCP is suitable for:

High-mileage driver (> 15,000 miles/year): mileage charges risk — HP or personal loan may suit better.
Ownership-focused: if you want to own the car from day one, HP is a better match.
Self-employed: accepted with proof of income; PCP gives flexibility to upgrade as income grows.
Bad credit: specialist lenders available; larger deposit can improve approval odds.

PCP may not suit you if:

You want to avoid a final payment and own the car from the start
You exceed mileage limits regularly
You prefer to repay early without restrictions — in that case, end your PCP deal or consider alternatives from Finance Limited offering the best deals on other options

PCP car deals are always secured against the car, and this type of finance gives more flexibility than a traditional loan.

Speak to our car finance experts to find out if a hire purchase plan matches your budget and ownership goals.

Can I get PCP car finance with bad credit score?

Of course, you can still apply for pcp finance with a bad credit score. A poor credit score or limited history doesn’t automatically stop you from getting approved. Some lenders specialise in helping drivers with lower scores and can still offer PCP.

You'll need to show accurate financial details. A bigger deposit can improve your chances. And working with a credit broker like Car-Finance helps you find a PCP agreement for a different credit profile — one that fits your budget and circumstances. Rates for bad credit applications typically start from 14.9% APR representative — higher than standard rates, but competitive across our lender panel.

Deposit requirements for PCP

A deposit is not always required for PCP. Where possible, putting down 10–20% reduces your monthly payments and total interest — but zero-deposit PCP is available with some of our lenders.

A deposit reduces your finance amount and lowers your monthly payments. A zero-deposit option increases what you repay over time.

Lenders assess your credit profile and affordability. A strong score and steady income can boost your chances of qualifying for a zero-deposit car finance agreement.

What happens at the end of the PCP agreement?

At the end of your PCP finance, you have three clear options:

Pay the outstanding finance and purchase the car
Use any equity as a deposit for a new PCP agreement
Return the car to the finance company’s control, with no extra cost (if mileage and condition meet the terms)

Can I end my PCP agreement early? (Voluntary Termination)

Under Section 99 of the Consumer Credit Act 1974, you have the legal right to end your PCP agreement early through Voluntary Termination (VT). To qualify, you must have paid at least 50% of the total amount payable — which in a PCP agreement includes the balloon payment (GMFV) in the total figure. This means the 50% threshold is often reached later in the agreement than many expect.

To exercise your right, notify your lender in writing. Once the car is returned in reasonable condition, you owe nothing further — no early repayment charges apply. If you haven't reached the 50% mark, you can pay the shortfall amount and then voluntarily terminate.

Handled correctly, VT should not automatically damage your credit file, though lenders may record it as 'voluntarily terminated'.