PCP
car finance
Free eligibility check with no impact on your credit.Lower monthly payments — only pay for depreciationFlexible end-of-term — return, buy or part-exchangePCP (Personal Contract Purchase) spreads a car's cost over 24 to 48 months. Monthly payments cover only the depreciation, not the full vehicle value. At 23.9% APR representative, a £7,500 car costs from £160 per month over 60 months, with an optional balloon payment of £4,875 to own the car at the end. Return the car, pay the balloon, or part-exchange for a new deal. Car-Finance.co.uk 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 of 3 to 30p per mile over the limit
Moneyrepublic Ltd (FRN: 967024) trading as car-finance.co.uk acts as a credit broker, not a lender, regulated as an Appointed Representative of F&I Online Ltd (FCA No. 731217), authorised by the Financial Conduct Authority.
Last Updated: May 2026
How to get PCP car finance?
Getting PCP car finance takes three steps.
Apply for a loan
Get approved for a PCP car finance deal
Drive away the same day
Our Lenders
We work with over 15 lenders offering 100+ HP and PCP deals so that you could have the best offer.
PCP car finance calculator
With the help of the calculator you can roughly estimate possible car loan options
Finance calculator
- 36 mo
- 42 mo
- 48 mo
- 60 mo
Your estimated examples
Representative example: Borrowing £9,000 over 60 months with a representative APR of 21.9%, monthly payment of £234.61, total cost of credit £5,076.60, total amount payable £14,076.60.
Can I get PCP car finance?
Yes, you can. Car-Finance.co.uk runs a soft credit check first, with zero impact on your credit score. A full credit check will be carried out by the lender if you proceed to a formal application. We work with 15+ UK lenders, including specialists for bad credit and low-deposit applications. Rates start from 9.9% APR (representative 23.9% APR).
What is PCP (Personal Contract Purchase) and how does it work?
PCP (Personal Contract Purchase) is a type of car finance agreement that offers three options at the end of the term. You can buy the car outright, return the car, or use any equity to start a new PCP deal.
PCP monthly payments do not cover the full value of the car. Your finance covers the difference between the car's price and its Guaranteed Minimum Future Value, known as the GMFV. The GMFV is the amount the lender predicts the car will be worth when the agreement ends. Because PCP payments cover only this depreciation gap, monthly costs are lower than HP on the same vehicle. The finance company holds legal title until you make the optional final payment.
The lender sets the GMFV at the start of the agreement based on the car's make, model, age, and agreed annual mileage. The gap between the purchase price and the GMFV forms the basis of monthly payments. A lower GMFV (stronger depreciation) results in a higher monthly cost. A higher GMFV keeps payments lower but increases the balloon payment at the end. PCP works well for drivers who cover fewer miles and prefer lower monthly costs.
How do PCP finance payments work?
PCP car finance keeps monthly costs lower by splitting payments across the agreement term.
Example: You take out a four-year PCP contract on a £20,000 car at 23.9% APR representative. You put down a £2,000 deposit and make £470 monthly payments, with an optional balloon payment (GMFV) of approximately £7,000 at the end. Rates start from 9.9% APR. Your exact rate depends on credit profile, deposit size, and chosen term.
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 allowance
- The future value of the car
- The car's value at the end
- The interest rate charged
- The GMFV set by the lender at the start
Comparing PCP with other finance options
| Features | Hire purchase (HP) | Personal contract purchase (PCP) | Personal loan | PCH / Leasing |
|---|---|---|---|---|
| Requires initial deposit | Optional | Optional | Yes (3 to 6 months' rental) | |
| Car is yours at the end | Optional | |||
| Fixed monthly payments | ||||
| Optional balloon (final) payment | N/A | |||
| Mileage limits | Yes, excess charges apply | |||
| Secured against the car | N/A | |||
| Support with vehicle issues | ||||
| Best suited for | Ownership from day one | Lower payments with flexibility | Full ownership, no mileage limits | New car every 2 to 3 years, no ownership |
The pros and cons of PCP car finance
Pros:
- Lower monthly repayments. PCP payments cover only depreciation, running 20 to 30% lower than HP on the same car.
- Fixed interest rates. Your rate locks in at the start. Monthly payments stay the same over the full term.
- Change cars every 2-4 years. Start a new PCP deal on a different car at the end of your term.
- Flexible end-of-term options. Return, buy, or part-exchange. No obligation to commit until the final payment.
- Soft credit check, no impact on your score. Car-Finance.co.uk checks eligibility with a soft search first. A full credit check will be carried out by the lender only when you formally apply.
- Bad credit considered. Specialist lenders on our panel accept applicants across all credit backgrounds.
Cons:
- You do not own the car until the final balloon payment. The finance company holds legal title throughout. Returning the car means you retain no equity.
- Mileage limits — excess charges apply. Exceeding the agreed annual cap costs 3 to 30p per additional mile. On a mainstream car at 10p per mile, 5,000 excess miles add £500 to the final bill.
- Repaying the loan early can be expensive. Early settlement may require paying remaining interest charges.
- Balloon payment required to own the car.The optional final payment (GMFV) can represent 30 to 60% of the car's original value, depending on the vehicle, agreed mileage, and term length.
What do you need to apply for PCP car finance
To apply for car finance you need:
- Your name and personal details
- Date of birth and nationality
- Recent address history
- Employment status and current income
- Income and expenses
Requirements:
- Be aged 18–79 years old (varies by lender)
- Deposit optional; 10 to 20% recommended
- Receive a monthly income of £1,000 or above
- Self-employed and freelancers accepted — 3 months' bank statements or SA302 required
Applicants outside these criteria can still apply, since some lenders accept lower minimum incomes or shorter UK residency case-by-case.
Is PCP car finance right for me?
PCP car finance suits drivers who want lower monthly payments and flexibility to change vehicles regularly.
PCP suits you if:
- You want lower monthly payments rather than buying outright
- You plan to change cars every two to four years
- You drive within the agreed mileage limits
PCP may not suit you if:
- You want to own from day one (HP transfers ownership automatically)
- You exceed 15,000 miles per year (excess charges add up)
- You prefer to repay early without restrictions
High-mileage drivers covering more than 15,000 miles per year face excess mileage charges. HP or a personal loan may suit better.
Ownership-focused buyers should consider HP, which transfers full title after the final payment without a balloon.
Low-budget drivers find PCP ideal, as payments cover only depreciation.
Self-employed applicants qualify with 3 months' bank statements or an SA302.
Bad credit applicants can apply through specialist lenders. A larger deposit improves approval odds.
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 a bad credit score?
PCP car finance is available to applicants with a poor or limited credit history. Car-Finance.co.uk runs a soft credit check first, with no impact on your score. A full credit check will be carried out by the lender if you proceed to a formal application.
We work with specialist lenders who accept applications across all credit backgrounds. Rates for bad credit PCP start from 23.9% APR representative, higher than standard rates but competitive across our lender panel.
Three factors improve approval chances:
- A larger deposit (10 to 20%) reduces the lender's risk
- Stable income of £1,000+ per month, supported by bank statements
- An accurate, up-to-date credit file with no unresolved disputes
Deposit requirements for PCP
A deposit is not always required for PCP. Where possible, putting down 10 to 20% reduces monthly payments and total interest. Zero-deposit PCP is available with some of our lenders. Lenders assess your credit profile and affordability.
What happens at the end of the PCP agreement?
PCP car finance ends with three options: return the car, pay the balloon to own it, or part-exchange using any equity.
- Option 1: Return the car.Return the vehicle at no cost if it meets fair wear and tear standards set by the British Vehicle Rental and Leasing Association (BVRLA) and stays within the mileage allowance. Excess mileage costs 3 to 30p per mile. Contact your lender to arrange a return date, attend the vehicle inspection, and hand over all keys.
- Option 2: Pay the balloon payment (GMFV) to own the car. The balloon equals the GMFV set at the start. Pay from savings, refinance the balloon as a separate loan, or combine both. After payment, the car is fully yours with no outstanding finance.
- Option 3: Part-exchange using any equity. If the car's market value exceeds the GMFV, the difference (equity) serves as a deposit for a new PCP deal. Negative equity (market value below GMFV) means returning the car under Option 1 may be the better choice.
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. For PCP, the total includes the balloon payment (GMFV). The 50% threshold arrives later in a PCP agreement than expected because the GMFV is counted in the total figure.
Notify your lender in writing. State clearly that you are exercising your right to voluntary termination under Section 99 of the Consumer Credit Act 1974. Include your agreement number and vehicle registration. Return the car in reasonable condition and you owe nothing further.
If you have not reached the 50% mark, pay the shortfall and then proceed with VT. Handled correctly, Voluntary Termination does not damage your credit file. Lenders may record it as "voluntarily terminated."
Were you mis-sold PCP car finance? What the FCA compensation scheme means for you
The Financial Conduct Authority (FCA) confirmed its motor finance redress scheme on 30 March 2026 (PS26/3)
In October 2024, the Court of Appeal ruled that lenders had failed to disclose commission arrangements. On 1 August 2025, the UK Supreme Court largely overturned that ruling, rejecting fiduciary duty and bribery claims. In one of the three cases (Johnson v FirstRand), the Supreme Court upheld a claim under Section 140A of the Consumer Credit Act 1974, finding the relationship unfair due to the size of an undisclosed commission.
- Which agreements are covered: HP and PCP agreements taken out between 6 April 2007 and 1 November 2024 where commission disclosure was inadequate. The scheme covers three categories: discretionary commission arrangements (DCAs), high commission cases (39%+ of total credit cost), and contractual tie arrangements. An estimated 12.1 million agreements fall within scope.
- Timeline: Scheme 2 (agreements from 1 April 2014 onward) has an implementation period ending 30 June 2026. Scheme 1 (agreements from 6 April 2007 to 31 March 2014) has an implementation period ending 31 August 2026.
Consumers who submit complaints before the end of the relevant implementation period are processed first. Lenders must contact affected consumers directly. The FCA estimates total redress of £7.5 billion, approximately £830 per affected agreement on average. Individual amounts are not guaranteed.
On 1 May 2026, the scheme was legally challenged. The FCA has stated it will defend the scheme.
- Claims management companies (CMCs) are not needed.The scheme is free. The FCA has warned against fraudulent claims firms charging fees for a free service. Check your eligibility at fca.org.uk.
- Guidance notice:This information is for guidance only. If you believe you have been mis-sold car finance, contact your lender directly or seek independent legal advice. Car-Finance.co.uk is not a claims management company.
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Car-Finance.co.uk is a trading name of Moneyrepublic Ltd (Company No. 12141408). We are an Appointed Representative of F&I Online Ltd (FCA No. 731217), which is authorised and regulated by the Financial Conduct Authority. Our service is free. No hidden fees.
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FAQ
We've collected the most popular questions about car loans from our customers
Can I get Personal Contract Purchase car finance with bad credit?
Yes, it's possible to get Personal Contract Purchase car finance with bad credit, with a common representative APR of 19.9%. Car-Finance works with a network of lenders, including specialists in car finance for those with bad credit. Even if you've had difficulties with repayments in the past or have a limited credit history, we can help match you with a car loan that suits your needs. However, finance is subject to status, and your eligibility will depend on the lender's assessment of your individual circumstances.
Does applying for Personal Contract Purchase car finance affect my credit score?
Applying with Car-Finance uses a soft credit search, which does not affect your credit score. You only get a hard search when you formally accept a finance offer.
How quickly can I get approved for Personal Contract Purchase car finance?
Many of our customers receive a decision in minutes. Once approved, you can choose your car and drive away the same day.
Are Personal Contract Purchases worth it?
PCP suits drivers who want lower monthly payments without committing to ownership. Monthly costs run 20 to 30% lower than HP on the same car. At the end, return the car, buy it, or part-exchange. PCP works best for average mileage drivers.
Do you need good credit for PCP?
Good credit is not required. Car-Finance.co.uk works with specialist lenders who accept all credit backgrounds, including CCJs and IVAs. A larger deposit and stable income of £1,000+ per month improve approval odds.
What happens at the end of the PCP agreement?
Three options: return the car at no cost (if fair wear and tear standards are met), pay the balloon (GMFV) to own the car, or use any equity as a deposit toward a new PCP deal.
Can I end my PCP finance contract early?
Yes. Under Section 99 of the Consumer Credit Act 1974, you can voluntarily terminate once you have paid 50% of the total amount payable. For PCP, the total includes the balloon (GMFV), so the 50% mark arrives later than expected. Notify your lender in writing.
What can I do if I am falling behind with PCP payments?
Contact your lender straight away. The FCA requires lenders to treat customers fairly and may offer reduced payments, a payment holiday, or a restructured plan. Missed payments risk default notices and repossession.
What else to consider before PCP finance?
Check the annual mileage allowance before signing. Excess charges of 3 to 30p per mile apply. Review the GMFV balloon amount. Compare total PCP cost (including interest) against HP and personal loan alternatives.
Will PCP affect my credit score?
The initial eligibility check uses a soft search and does not appear on your credit file. A formal application triggers a hard search visible to other lenders. On-time payments build a positive record.
Are there additional PCP charges?
Excess mileage costs 3 to 30p per mile over the agreed annual limit. Over a 3-year term, exceeding by 5,000 miles per year could add £450 to £4,500 depending on the vehicle. Wear and tear beyond normal use incurs repair charges at return, assessed using BVRLA standards. Early settlement may include remaining interest.
Can you modify a car on PCP?
The finance company owns the car during PCP, so modifications need written lender permission. Reversible changes (dash cams, phone holders) are accepted. Permanent modifications (body kits, engine remaps) risk breaching your agreement.
Do I need to insure my car if it's on a PCP deal?
Yes. Fully comprehensive car insurance is required for the full PCP term. The finance company is listed as the interested party on the policy. GAP insurance is optional but covers any shortfall if the car is written off.
Is PCP car finance better than HP?
PCP offers lower monthly payments because you pay only depreciation. HP costs more monthly but transfers ownership after the final payment. PCP includes mileage limits and a balloon. HP has no mileage restrictions. PCP suits drivers who change cars regularly.
Is PCP car finance included in the FCA redress scheme?
Yes. The FCA redress scheme covers PCP agreements from 6 April 2007 to 1 November 2024 where commission disclosure was inadequate. Lenders contact affected consumers after the implementation period ends (30 June 2026 for Scheme 2). No claims management company is needed. Visit fca.org.uk.
What happens if my car is worth more than the GMFV?
Positive equity occurs when market value exceeds the GMFV at term end. You can use the equity as a deposit toward a new PCP deal. The equity is not available as cash.
Can I get PCP car finance if I'm self-employed or a freelancer?
Yes. Lenders require 3 months' bank statements or an SA302 tax return. The soft credit check does not affect your score. A full check will be carried out by the lender on formal application. Income stability matters more than employment type. Check your eligibility.