What happens at the end of a Personal Contract Purchase (PCP) contract?

Knowing what financial product you have utilised to use/own your car is essential. Due to the poor quality of information customers receive, we do get enquiries where there is still a total misunderstanding of what financial product is being offered/advertised. At CarLease UK we offer a number of products to personal and business lease customers including:

  • Contract hire – use and return style product. This is not an ownership product;
  • PCP – a more flexible ownership arrangement (discussed below);
  • Finance lease – an ownership style product; and
  • Hire Purchase – the traditional ownership finance product.


A PCP is an ownership-style product and is an alternative to the rental style contract hire method. A PCP quote should show the customer:

  • The initial payment (payable 7-10 days after delivery);
  • The monthly payments (payable on a specific date per month – generally set by the date of delivery);
  • The Guaranteed Future Value (GFV)/Balloon – payable at the end of the contract; and
  • The APR.

Unlike contract hire, where you return the car at the end of the contract, a PCP offers the customer an opportunity to pay the GFV to own the car, return the vehicle (subject to return standards) or sell the vehicle if there is an opportunity to benefit from equity (any additional money in addition to the settlement) in the vehicle. As such, this can be more flexible than contract hire. However, do note that not all contract hire deals are equally available on a PCP basis. Please also consider that not every PCP will result in an “equity” situation, as this will be subject to market forces – a customer should never be promised that their car will exceed the value of the GFV.

If you are considering a purchase-style agreement, do consider the car you are looking to procure as you need to consider what specification will be popular with future buyers – exterior colour, interior colour, additional factory specification etc

For more information on PCP simply get in touch with our help team or read more articles in our help and advice section, you can also browse our blog pages to learn more about the kinds of cars which customers choose regularly.

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