What Is PCP Finance?
PCP (Personal Contract Purchase) is one of the most popular ways to finance a car. It offers lower monthly payments compared to other finance options, with the flexibility to either return, part-exchange or buy the car at the end.
Written and reviewed by Phil Kehoe, Director, Motoring.Today · methodology in our editorial standards.
Last reviewed: July 2026
How PCP finance works
PCP is a 3-part agreement designed to keep your monthly payments lower.
PCP finance example
Example based on a car price of £30,000 over 48 months at 9.9% APR representative.
- Cash price
- £30,000
- Deposit (advance payment)
- £3,000
- Total amount of credit
- £27,000
- Duration of agreement
- 48 months
- Rate of interest (fixed)
- 9.5% p.a.
- Monthly repayment
- £461.13 × 48
- Optional final payment (balloon)
- £12,600
- Option-to-purchase fee
- £1.00
- Total charge for credit
- £7,735.24
- Total amount payable
- £37,735.24
Motoring.Today is a credit broker, not a lender. Motoring.Today is a trading style of Motor Genius Group Ltd (FRN 960504), an appointed representative of The Compliance Guys Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 941360). Finance is subject to status and approval; rates depend on your circumstances and the lender. Available to permanent UK residents aged 18+. Example figures only — not a quote.
Example figures only. Your actual payments depend on your credit profile, deposit and the lender we match you with.
Pros and cons of PCP finance
PCP can be a great option, but it's important to understand the benefits and considerations.
- Lower monthly payments
- Fixed payments make budgeting easier
- Option to change your car every few years
- You only pay for the value you use
- Flexible end-of-term options
- You don't own the car unless you pay the final payment
- Mileage limits — excess charges may apply
- Condition charges if the car has damage
- Final payment can be large if you want to own the car
- A bigger deposit may unlock the best rates
Who is PCP best for?
PCP is ideal if you:
PCP vs HP finance
The two most popular UK car finance options — here's how they compare side by side.
| Feature | Personal Contract Purchase (PCP) | Hire Purchase (HP) |
|---|---|---|
| Monthly payments | Lower | Higher |
| Deposit | Typically 10% | Typically 10%+ |
| Mileage limits | Yes — usually 6k–15k / year | None |
| End of agreement | Return, part-exchange or pay balloon | You own the car |
| Balloon payment | Yes (Guaranteed Minimum Future Value) | No |
| Flexibility | Higher | Lower |
Frequently asked questions
Quick answers to the most common questions about PCP car finance.