What is Personal Contract Purchase (PCP)?
Personal Contract Purchase is for private individuals who want a hassle free and
cost effective way to finance and maintain (optional) a vehicle with low monthly
Personal Contract Purchase (PCP) is ideal if someone opting out of a company car.
Since the changes in Company car tax and CO2 we have seen a marked increase in customers
taking this funding option.
At the start of the contract the Leasing Company will set the Residual Value of
the vehicle, this is guaranteed future value at the end of the contract (GFV). This
gives you two options at the end of the contract:
- Hand the vehicle back to the Leasing Company if the value of the vehicle is less
than the set Residual Value or if you don’t want hassle in disposing of the vehicle.
- You can pay the final payment and keep the vehicle or sell it on.
The vehicle is registered in your name and if desired you can also enjoy the convenience
of a full maintenance service, at a fixed monthly cost.
Road Fund License is only provided for the first year of the contract.
Can my client’s employers be noted on PCP?
PCP is designed specifically for private individuals. It is important to understand
that in no way can the individual’s employer be involved in the arrangement. If
your employer is involved in any way then you may be at risk of Benefit in Kind
Tax (under section 157 of the Taxes Act 1988). This is often referred to as a P11D
Who owns the vehicle?
The vehicle is registered in the Drivers name but owned by the Leasing Company.
The driver is responsible for the cost of the Road Fund Licence after the first
Is PCP subject to VAT?
VAT is only applicable to the maintenance (optional) element of the payments.
What is the initial outlay?
It is usually three rentals in advance as a deposit.
What Payment Options do you have with PCP?
There are 3 different Payment/Rental Profiles for this product:
Terminal pause For example if you have a 36 month contract, you
will pay 3 rentals in advance followed by 33 monthly rentals and 2 months where
no rentals are due before the end of the contract.
Spread rentals This is the usual payment profile giving a lower
rental than 'terminal pause' but with the same contract length. On a 36 month contract
there would be 3 advance rentals followed by 35 monthly rentals with the contract
ending on month 36.
Enhanced deposit This is used when you prefer to pay a higher payment
in advance or have a part exchange and wish to use this vehicle towards your initial
payment – this will reduce your regular monthly payment. For a 36 month contract,
you will pay 1 rental (should be no less than an equivalent 3 rentals) in advance
followed by 35 monthly rentals with the contract ending in month 36.
What services are available on a maintenance agreement for PCP?
Items included are servicing, routine maintenance, unlimited tyres, exhausts and
Items excluded are glass and damaged items.
We have a “one line” telephone number that you can call to arrange the following:
- Service bookings with FREE collection and delivery including ‚'wash
- Breakdown and recovery services (Optional with a maintenance or non maintenance
- Tyre replacement service with mobile fitting available Free of Charge
- MOT booking facility
- Foreign travel documentation and advice
Simply Call one number and all your maintenance requirements will be taken care
of leaving you hassle free administration.
Services should be carried out in accordance with the guidelines in the manufacturer's
handbook; failure to follow these procedures could invalidate the vehicle manufactures
Does the Leasing Company insure the Vehicle?
No. It is your responsibility to insure the vehicle. Please see the Terms & Conditions
of the contract.
What if you exceed the Mileage quota?
How does excess mileage work in conjunction with PCP?
If the vehicle is returned over mileage you would be liable for an excess mileage
With any PCP agreement, the predicted annual mileage of the vehicle is crucial,
as it affects the resale price at the end of the contract. If that mileage is exceeded,
a charge will be made, at end of the contract period, for every mile over the agreed
total contract mileage. The pence per mile (ppm) figure is broken down to cover
the two areas (if maintenance is taken).
Depreciation - The additional mileage travelled affects the vehicle disposal value
of at the end of the hire period as the anticipated value would not be achieved.
The more miles the vehicle has been driven the less it is worth when it is sold.
Maintenance - The maintenance budget initially set would not meet the additional
costs incurred if the mileage is exceeded. For example, an additional service or
set of tyres may be required.