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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).
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to us
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Business Managers.
You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your car is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next car.
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.
The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
Steven Eagell Limited is authorised and regulated by the Financial Conduct Authority (FCA Reference Number 671531)as a credit broker. We are not a lender or an independent financial advisor. In the first instance, we will introduce you to Toyota Financial Services and provide you with information regarding the finance products available to enable you to decide whether a particular finance product from Toyota Financial Services is right for you based on the information provided. In the event that Toyota Financial Services is not able to provide credit, we will refer you to another trusted credit broker already known to us. This credit broker will attempt to source credit for you through an alternative panel of lenders.
You are not required to use Toyota Financial Services or any other lender introduced by our trusted broker We do not charge you a fee for an introduction to Toyota Financial Services or to our trusted broker but we will receive a commission if you use their services, this is normally a fixed fee or a fixed percentage of the amount you borrow. The level of commission will vary dependant on the product and the lender that you use. We will inform you of the amount of commission that we will earn in good time before the finance agreement is entered into and ask you to consent to its payment. You do not have to take our finance. You can arrange funding of your vehicle elsewhere and in some cases it may be cheaper.
Steven Eagell Limited is also an appointed representative of Ingeni Services Group Limited, Unit 11, Atlas Works, Foundry Lane, Earls Colne, Colchester, CO6 2TE, which is authorised and regulated by the Financial Conduct Authority. Ingeni Services Limited's (FCA Reference Number 747381) Ingeni Services Group Limited business is to act as an agent on behalf of the insurer for insurance distribution activities only. We do not charge you a fee for our services as an insurance intermediary. We will earn a commission from the insurance provider for introducing you to them. The nature or level of commission we receive will not alter our advice to you and will depend on the product that you purchase.
For full details of our FCA Commission Status Disclosure please click here