Understanding Personal Contract Purchase

  • Personal Contract Purchase, or PCP, is a variation of a Hire Purchase agreement
  • The car’s value at the end of the contract is calculated at the start of the agreement and is deferred.
  • This deferred sum is usually referred to as the Guaranteed Future Value (GFV) or Optional Final Payment (OFP). The future value of the car is guaranteed by the lender, so it will not fluctuate
  • Deferring the GFV to the end of the agreement means that your regular monthly payments are lower than those on a comparable HP agreement over the same term. It gives you the option to own the car at the end of the agreement
  • The APR (Annual Percentage Rate) is set before the contract begins
  • Flexible loan period – you choose any period to suit your budget between two to four years
  • You are the registered keeper of the car and responsible for insurance and maintenance
  • The finance company remains the legal owner of the vehicle until the amount you borrowed has been fully repaid


  • Lower monthly payments than Hire Purchase for a comparable car and term
  • Quick and easy to arrange • Choice of monthly payments to suit you between 24 and 49 months (2-4 years)
  • Flexible deposit options • Repayments remain the same amount throughout the agreement
  • Flexibility at the end of the agreement on what you would like to do with the car
  • Consumer Credit Agreements are regulated, which means you have certain legal rights and protection


  • PCPs could work out more expensive overall than a Hire Purchase agreement for an equivalent car, especially if you decide to enter into a second finance agreement to pay the deferred future value of the car at the end of the initial PCP agreement
  • Estimate your annual mileage carefully, as you will be charged for each additional mile if you choose to hand the car back
  • You can end your agreement early. How far into your agreement you are will affect the amount left to pay
  • If you return the car, it has to be in good condition, as any damage may be charged to you
  • The debt is secured against the car, therefore if you can’t meet the monthly payments, the car could be repossessed by the finance company to pay off the debt. This reduces the risk for the lender as the finance is secured

Before you decide upon the type of finance agreement you wish to proceed with, please ensure that the monthly payments you agree upon are affordable and that you are not aware of or expect any significant changes to your income or expenditure during the length of your chosen agreement. We at Listers want to ensure that you fully understand all the options available to you and your chosen credit agreement. Please contact one of our managers at your chosen dealership. They are fully trained and happy to discuss any questions you may have regarding financing your vehicle