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Is PCP Car Finance a Good Idea?

PCP car finance is a popular option for those looking to purchase a car – but is it really a good idea? In this article, we'll explore the pros and cons of opting for personal contract purchase (PCP) finance to help you make an informed decision.


What is PCP Car Finance?

Personal Contract Purchase, or PCP, is an agreement between the buyer and the lender that enables you to purchase a car with a lower initial deposit and more manageable monthly payments than traditional financing methods. 

This type of loan typically covers the cost of the vehicle minus a deposit, which can be anywhere from zero (or near enough) up to around 50% of its total value. The remaining balance is then paid off in monthly instalments over an agreed period of time.

At the end of the loan period, you will have two options: either return the car or pay off any remaining balance to keep it. 

Pros of PCP Car Finance

One great benefit of PCP finance is that you’re likely to be able to afford a higher-specification model than if you opted for another form of financing. This means that you can enjoy driving something more luxurious and reliable without having to pay for all upfront costs associated with buying outright

Furthermore, as these loans are based on fixed-rate interest rates, your monthly payments will remain consistent throughout the duration of your agreement – helping you budget accordingly.

Another perk when opting for PCP finance deals is that they often come with maintenance packages included in their contracts. This means that certain routine servicing tasks such as oil changes and wheel alignments are taken care of by the dealer during your term meaning extra peace of mind during your ownership experience. 

Cons of PCP Car Finance 

The major downside to signing up for PCP finance deals is that there’s often an inflated interest rate attached when compared with other loan types – meaning they may not always be as cost-effective as initially expected over their full term duration. Additionally, as with any loan type, if regular repayments aren’t made then penalty fees may apply or even repossession might occur in extreme cases.

It’s also important to note that depending on how long your agreement goes on for, its potential resale value could be significantly lower than what was initially paid – so bear this in mind when making your calculations before committing.  

Finally, should you decide at the end of your loan period against keeping the car then you won’t get anything back from what has been paid in so far – rather any unused portion will simply be written off by the lender – potentially leaving you feeling short-changed if too much has already been spent relative to its current worth.


When making any big financial commitment such as taking out a car loan it’s essential that all available options are explored thoroughly beforehand so that you can ensure not only getting yourself behind the wheel but also doing so at an agreeable price point and within terms best suited to your individual situation – this is where considering both pros and cons when evaluating whether PCP car finance makes sense for you comes into play!

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