Hyundai Finance

What is Personal Contract Purchase (PCP)?

Personal contract purchase (PCP) is a type of car finance that allows you to drive a new or used car for a set period of time (typically 2-5 years) without having to pay the full upfront cost.

Under a PCP agreement, you will make monthly payments that cover the depreciation of the car over the course of the agreement. At the end of the agreement, you will have the option to:

  • Pay the Final payment to own the car outright.
  • Trade in the car for a new one and start a new PCP agreement.
  • Return the car and walk away.

The balloon payment is the amount of money that you still owe on the car at the end of the agreement. It is typically calculated based on the car's predicted residual value (the value of the car at the end of the agreement).

PCP can be a good option for people who want to drive a new car every few years without having to worry about selling the car themselves. However, it is important to remember that PCP agreements can be more expensive than other types of car finance, such as hire purchase. You should always compare different deals before you commit to a PCP agreement.

How does PCP actually work?​


Once you've made your vehicle selection, our dedicated Business Managers will guide you through the next steps. Together, you'll establish your desired annual mileage and determine the agreement term that suits your needs. We'll then calculate the Guaranteed Minimum Future Value (GMFV) of the vehicle at the agreement's end and customize a deposit and monthly payment plan tailored to your preferences. At the conclusion of your agreement, you'll have three options to choose from.

First, you can simply return the car to us hassle-free. Alternatively, you can opt to keep the car by making the optional final payment. Lastly, you have the option to trade it in for another car and embark on a new automotive journey.

For a quotation, assistance, or expert advice, please don't hesitate to contact us and request to speak with one of our knowledgeable Business Managers.

What are the advantages of PCP?

Advantages of PCP Financing: Lower Monthly Payments and Flexibility

When it comes to financing your car, PCP (Personal Contract Purchase) offers several advantages over Hire Purchase agreements. One notable benefit is the typically lower monthly payments associated with PCP financing. This allows you to enjoy your desired vehicle while maintaining a more manageable budget.

Another advantage of PCP is the freedom it provides at the end of the agreement. If you decide not to purchase the car, you can simply walk away after completing all the payments. This flexibility eliminates the need to worry about selling the vehicle later on.

Similar to Personal Contract Hire (PCH), PCP allows you to drive away in a new or used car every few years, depending on your chosen term. This arrangement grants you the joy of experiencing different vehicles without the hassle of selling them yourself.

Furthermore, if your car's value exceeds the Guaranteed Future Value (GFV), you can leverage that equity as a deposit towards a new car. This equity contribution reduces the amount you need to finance for your next vehicle, providing an attractive option for upgrading or switching to a different model.

With PCP financing, you can enjoy the benefits of lower monthly payments, the flexibility to walk away, the opportunity to drive a new car periodically, and the potential to use any equity towards your next car purchase.

What should you consider when option for a PCP?

  • If you want to buy the car you will need to pay your final balloon payment (the Guaranteed Future Value).
  • Similar to PCH, you will need to agree on a mileage allowance at the beginning of your contract and there may be excess mileage charges if you exceed this.
  • You won’t be able to sell the car without settling the finance.
  • You won’t own the car until you have made all of your repayments.
  • You’ll need to keep the car properly insured, maintained and in your possession until the full value is paid off.

Can I settle my PCP agreement early?


Settle Early or Benefit from Positive Equity: Options in PCP Financing

In the realm of PCP financing, you have the option to settle your agreement before its designated end by requesting a settlement figure from the finance company. It's important to note that settling early involves paying the difference between the current value of your car and the remaining amount you owe. This discrepancy, known as negative equity, may exist in some cases.

Conversely, there is a possibility that your car's value exceeds the Guaranteed Future Value (GFV) at the end of your term. This situation offers a distinct advantage as it generates positive equity. With positive equity, you can contribute a portion of the surplus value towards your next car, potentially reducing the financing amount required.

Whether you choose to settle early or benefit from positive equity, PCP financing presents you with flexibility and options to adapt to your changing needs and preferences throughout the agreement.

What is Hire Purchase (HP)?

​Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright. 

What are the advantages of HP?

  • You’ll be able to drive away a car that you may not have managed to buy outright.
  • Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.
  • Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the car.

What should you consider when opting for HP?

  • Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the car.
  • You won’t be able to sell the car without settling the finance.
  • You won’t own the car until you have made all of your repayments.
  • You’ll need to keep the car properly insured, maintained and in your possession until the full value is paid off.

Can I settle my HP agreement early?


The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.

For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.

Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.

Free & Fast Free Valuation When selling or part-exchanging, it is essential to know what your vehicle is worth in order to get the best price.