PCP car finance

One of the most popular options, PCP car finance offers you an easy loan to acquire that's simple for dealers to set up. In fact, PCP car finance is so simple to draw up that it's why you are able to complete in the showroom of a car dealership without ever actually having to go meet with a loan company.

For those who hate heading to the bank and asking for a loan, a PCP car finance loan option may be a very desirable way to get a new car, and avoid the uncomfortable financial scrutiny.

The way that a PCP car finance loan option works is based on making a deposit and signing a monthly tariff contract. You simply make a small down payment, or deposit, on your new vehicle, and then agree to make monthly payments for the contract length that you agree on.

In most cases the PCP car finance loan term ranges between 24 and 36 months. Although this may be adjusted to a little longer term for lower monthly payments, or a shorter loan period if you can afford higher monthly payments, and want to reduce how much you end up paying in interest.

The difference between PCP car finance and a typical car finance loan is that you do not technically own the car during the time period that you are involved in the loan. In fact, they are actually a nice compromise between the terms of a loan and a purchase, as at the end of the contract you have both options open to you.

At the end of the term you can decide to make the last payment and own the car, or give it back to the dealer, since you in effect, only hired the vehicle.

Many people will use this type of contract to get a new vehicle for the three year contract and then give it back to the dealer, so that they can take out a new contract and get another new vehicle.

The benefit of this type of contract is that you are not tied into mileage limitation the way that you are if you lease a car, and you still get to use the car for most of its prime lifetime. Additionally, if you decide that you are not ready to give up the car, it becomes very affordable to simply keep it, unlike leasing when you only get a small discount on the price of the vehicle.

PCP car finance calculator