This topic covered Personal Contract Purchases (PCP)

  • PCP is a very popular and flexible way of purchasing a vehicle.
  • Like a hire purchase agreement, title to the vehicle under a PCP agreement is kept by the lender until everything is paid off.
  • If the vehicle is worth less than the GMFV at the end of the agreement (assuming it has been kept in good condition and hasn't exceeded the allowed mileage), the customer can simply hand the vehicle back with nothing more to pay.
  • It allows customers an affordable, low-risk funding package that has the flexibility to meet their driving needs now and in the future. It is a real alternative to traditional funding.
  • It allows the customer to know the ‘least amount' the car will be worth at a fixed-point in the future.
  • The customer is in control of the options available at the end of the agreement.
  • Agreements can be regulated, exempt or unregulated under consumer credit regulation. This all depends on the type of customer, the amount borrowed and the purpose of the lending.