PCP - Personal Contract Purchase

What is a PCP and how does it work?

A PCP or Personal Contract Purchase is a method of buying a car whereby you put down an initial deposit and then pay a monthly amount for the duration of the agreement. At the end of the agreement you usually have a few options:

  1. You can pay the final sum owed, known as the Balloon Payment. This is set at the start of the term.

  2. You can hand the car back.

If you chose to hand the car back, you may have some equity or negative equity in the car. This means that the car is valued more than the predicted final balloon payment and this equity can be used for the next car deposit. If you have negative equity you can either settle with the dealership or pay this sum. This is usually outlined in the contract when you sign.

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