Finance Options at Pratt & Gelsthorpe

Our Finance Options

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. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).

What are the advantages of PCP?

• Monthly payments on a car financed by PCP are usually lower than if your car is financed by a Hire Purchase agreement. If you decide not to buy the car, you can simply walk away when you've made all the payments.
• Similar to PCH, you can drive away a new or used car every few years (dependent on the chosen term) without worrying about selling it on.
• If your car is worth more than the Guaranteed Future Value, then you can use that equity towards a deposit on a new car.
   

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.

What are the advantages of HP?

• You’ll be able to drive away a car that you may not have managed to buy outright.
• Similar to PCH, you can drive away a new or used car every few years (dependent on the chosen term) without worrying about selling it on.
• If your car is worth more than the Guaranteed Future Value, then you can use that equity towards a deposit on a new car.