Explore flexible PCP car finance options and discover some of the UK’s best PCP car deals with Vertu. Whether you're searching for a brand-new vehicle or a quality used PCP car, this guide explains everything you need to know.
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PCP Finance
What is PCP Car Finance?
If you’re wondering “what is PCP car finance?”, it stands for Personal Contract Purchase, one of the most popular ways to finance a car in the UK.
The definition of PCP is simple: it’s a type of car finance where you pay lower monthly instalments because you’re only financing part of the vehicle’s value, not the full amount.
With a PCP car finance agreement, you typically:
- Pay an initial deposit
- Make fixed monthly payments
- Have a larger optional final payment (often called a balloon payment)
This structure makes PCP car deals ideal for drivers who want affordability and flexibility.
How PCP works at Vertu?
What Are PCP Car Deals?
They are finance offers that allow you to drive a new or used car with:
- Lower monthly payments
- Flexible end-of-term options
- Access to newer or more premium vehicles
Many drivers choose PCP car deals because they make it easier to regularly upgrade to the latest models without committing to full ownership.
Benefits of PCP Car Finance
Choosing a PCP car comes with several advantages:
- Lower monthly payments than many other finance options
- Access to better or newer vehicles
- Flexible end-of-contract choices
- Fixed payments for easier budgeting
- Customisable deposit and contract length
For many drivers, PCP car finance is ideal as it allows them to access models of a higher spec than they might be able to afford outright.
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Alternative car finance options
What is the difference between Personal Contract Purchase (PCP) and Hire Purchase (HP)?
Depending on your lifestyle, budget, and needs, both finance options have their benefits.
With PCP finance, you can choose whether to own the car at the end of the agreement. In comparison, with HP finance, you are the legal owner of the vehicle at the end of the contract.
The monthly payments with a PCP contract are lower compared to an HP contract. This is because if you wish to own the vehicle at the end of a PCP plan, you must make a balloon payment. With HP, you pay more throughout the agreement, but there is no large payment at the end.
What credit score do you need for PCP finance?
To be eligible for PCP finance, you must have either a good or excellent credit rating. For those with a lower credit rating, we recommend our other finance options. You can find more information on our finance explained page
What is a PCP car finance agreement?
Personal Contract Purchase (PCP) is a common car finance option. It is a great way to get your dream vehicle by paying affordable, fixed monthly instalments.
At the end of the finance contract, you can choose whether to own the car or return it to the dealership. If you want to own the vehicle, you must make a larger balloon payment. You can also get a completely new car with a new PCP agreement.
What happens at the end of PCP finance?
At the end of the PCP agreement, you can choose from three options:
- Hand the vehicle back to the dealership
- Pay a balloon payment to own the car
- Trade it for a brand-new car and a new PCP agreement
Should I keep my car after PCP?
Depending on your needs and lifestyle, you can choose to buy the vehicle. If the vehicle has low mileage and it’s in great condition, keeping it may be a great option.
To get ownership of the vehicle, you must pay the resale value of the car, or a balloon payment. After making the payment, you are ready to continue your adventure with your car.
However, if you lack the finances to pay the balloon payment, or you rarely use the car, this may not be the best option for you.
Can I end my PCP finance early?
Ending your PCP contract early is considered a voluntary termination. You are allowed to do this if you have paid more than 50% of the total payable amount of the contract. All interest and fees must able be fully repaid before you can terminate the contract.
Ending your agreement early might be a suitable option for you if you cannot keep up with the monthly payments. If you decide to end your agreement early, you will not receive a refund, and you must return the vehicle to the dealership.
Can you finance a PCP balloon payment?
Yes, you can. To be eligible, you must have a good or excellent credit rating as well as an appropriate income. You can request finance for the balloon payment in several ways:
- Refinancing with a new PCP
- Refinancing with an HP agreement
- Refinance with a personal loan from a bank
Can PCP finance be transferred to a new owner?
Unfortunately, no. During your agreement, the vehicle is owned by the company that provided your finance. The person who has borrowed the money must be the registered keeper and the main driver of the car.
Can you pay PCP finance off early?
You can complete the PCP contract early by paying the remaining balance. You can get this figure from your finance provider at any point during your agreement. This will reduce the amount of interest you pay throughout the contract.
If you pay your PCP finance and the balloon payment off early, the vehicle is legally yours. The finance provider is allowed to charge you an additional two months’ interest with the amount of settlement.
What does Guaranteed Minimum Future Value (GMFV) mean?
The Guaranteed Minimum Future Value (GMFV) is a key part of how PCP car finance works. It’s the estimated value of the car at the end of your agreement, set at the start of your contract.
In simple terms, the GMFV is:
- The minimum amount your car will be worth at the end of your PCP term
- The optional final payment (also known as the balloon payment) if you decide to keep the car
Because PCP car finance is based on the difference between the car’s current price and its future value, a higher GMFV can help lower your monthly payments.
What details and documents will I need when applying for PCP finance?
When applying for a PCP car finance agreement, you’ll typically need to provide some basic personal and financial information.
This usually includes:
- Proof of identity (e.g. driving licence or passport)
- Proof of address (e.g. utility bill or bank statement)
- Employment details and income information
- Bank account details for setting up payments
Lenders use this information to assess your eligibility for PCP car deals and determine what finance options are available to you.
Are there 0% interest PCP agreements?
Yes, 0% interest PCP car deals are sometimes available, usually on selected new cars or promotional offers.
With a 0% APR PCP car finance deal:
- You won’t pay interest on your monthly payments
- You’ll only repay the agreed amount plus any fees
However, these offers often:
- Require a larger deposit
- Be limited to certain models or stock
- Be subject to eligibility and credit approval
Can you have two PCP deals?
Yes, it’s possible to have two PCP car finance agreements at the same
time.
However, whether you’re approved for multiple PCP car deals depends on:
- Your credit score
- Your income and affordability
- Your existing financial commitments
Lenders will assess whether you can comfortably manage both agreements. If you’re considering taking out another PCP car, it’s important to ensure it
fits within your budget.