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How does PCP Finance Work?

The most popular method of car finance, Personal Contract Purchase (PCP) is a hire purchase agreement that offers you various options at the end of the agreement.

A PCP finance agreement is a flexible and easy way to create a bespoke finance package tailor-fitted to your personal specifications and preferences. You will have ownership of the vehicle for a fixed period of time, under an annual mileage agreement specified by yourself at the start of the agreement. You will pay a fixed monthly fee for the vehicle for the duration of the contract. As your vehicle increases in mileage, the value of the car is depreciated, and your monthly payments are essentially covering the depreciation of the vehicle whilst you own it.

PCP works out the difference between the value of the vehicle at the start of your agreement and the predicted value (based on you performing the agreed mileage allowance) at the end of the contract

The advantage of PCP is that the predicted value of the vehicle at the end of the agreement (the GFV) is fixed. This means the value of the car is immune from market fluctuations during the course of the agreement.

Once your monthly payments are finished, you will be presented with three options:

PCP Option 1


Pay the GFV 'balloon payment' and keep the car

PCP Option 2


Hand the car back with no further payments

PCP Option 3


Part exchange the vehicle for a new vehicle lease

What are the benefits of PCP finance?

PCP Finance offers you a number of benefits. PCP agreements are a quick, easy, and cost-effective method of driving away new vehicles without having to go through the usual lengthy application process for traditional loans. But in addition:

  • PCP allows you easy access to brand-new vehicles. PCP finance deals usually last between 36-48 months, meaning you can change your vehicle frequently to newer models with no strings attached.
  • You have various options at the end of the contract. You can either pay the GFV and keep the car, hand it back or trade it in for a new one.
  • PCP finance deals are incredibly flexible. You can play around with the deposit, monthly payments, and annual mileage to suit your needs.
  • As the GFV is fixed in advance, your vehicle might actually have a higher market value at the end of the contract, allowing you to use the extra equity towards a deposit on a new car.
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What happens if you use more mileage than agreed at the start of the contract?

If you choose the hand the vehicle back and have exceeded the agreed annual mileage, you will be liable to pay for each mile over the agreed total. The condition of the vehicle will also be assessed according to the BVRLA (British Vehicle Rental and Leasing Association) Fair Wear and Tear guidelines. Any damage outside the BVRLA guides may be subject to end-of-lease penalty charges.

Does Chorley Group provide finance?

No. Chorley Group acts as a credit broker between you and one of our lending partners. Once we have built and agreed on a finance package with you, we will submit your claim to one of our lending partners for approval - this is often done on the same day.

Do you qualify for Personal Contract Purchase leasing?

To be eligible for car financing on a vehicle you must be at least 18 years of age with a full UK driving licence. A decent credit rating is required for all finance agreements. Your credit approval is subject to the lenders satisfaction, however, we can assist you in performing a 'soft credit check' to see whether you may or may not be eligible before we build a PCP deal with you.

Personal Contract Purchase Finance Example:

PCP Finance agreements may look complicated at first glance, but they are one of the easiest and straightforward ways of financing your new car with more decisions available at the end of the deal.

Cash Price £16,471.61 The price to buy the vehicle outright without finance
Customer Deposit £199.00 The upfront deposit cost you pay at the start of the contract.
Finance Deposit Contribution £3,250.00 The deposit contribution from the manufacturer/Chorley Group. This is essentially the amount discounted off the original deposit cost.
Total Deposit £3,449.00 The customer deposit and the deposit contribution added together.
48 Monthly Payments of£199.99 The length of the contract and the agreed fixed monthly payments for the duration of the agreement.
Amount Financed £13,022.61 The amount of finance you will receive to cover the costs of the vehicle is paid back through monthly payments.
Final Optional Payment (GFV) £5,320.53 This is the predicted future value of the vehicle once you reach the end of the contract. When the term is up, this is how much it will cost to buy and keep the vehicle. It is often referred to as a 'balloon payment'.
Total Amount Payable £18,321.53 The total amount paid to keep the car on the PCP contract. The total deposit, all the monthly payments, and the GFV added together.
APR Representative 4.99% The percentage of interest added into the contract.
Annual Mileage 6,000 The number of miles you can use the vehicle for per year. The annual mileage is decided at the start of the contract. Mileage exceeding the agreed amount will result in additional charges at the end of the contract.

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