What Does PCP Finance Mean?

Learn what PCP finance is and how it can help you drive a new car without breaking the bank. Discover the benefits, examples, and case studies of PCP finance.

Understanding PCP Finance

PCP stands for Personal Contract Purchase, a form of vehicle finance that has become increasingly popular in recent years. It is a type of finance agreement that allows you to drive a new car without having to buy it outright. Instead, you make monthly payments over a fixed period of time, typically two to four years.

How Does PCP Finance Work?

With PCP finance, you pay an initial deposit, followed by monthly payments for the duration of the contract. At the end of the agreement, you have three options: you can return the car to the finance company, buy the car outright by paying the remaining balloon payment, or use the equity in the car as a deposit for a new PCP agreement.

Benefits of PCP Finance

  • Low monthly payments
  • Flexible options at the end of the agreement
  • Opportunity to drive a new car every few years

Example of PCP Finance

For example, if you wanted to drive a brand new car worth $30,000, you could put down a deposit of $3,000 and make monthly payments of $300 over a three-year period. At the end of the agreement, you could choose to return the car, buy it for a pre-agreed lump sum, or trade it in for a new model.

Case Studies

According to a recent survey, 70% of car buyers in the UK are now choosing PCP finance over traditional methods of purchasing a car. This is because PCP finance offers lower monthly payments and more flexibility than other forms of vehicle finance.


PCP finance can be a great way to drive a new car without breaking the bank. By understanding how PCP finance works and the benefits it offers, you can make an informed decision about whether it is the right option for you.

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