What is Personal Contract Purchase (PCP)?
If you’re looking for a flexible finance package to help you get the keys to your dream car, using a PCP calculator to help you find an unbeatable deal is one of the most popular ways to do it.
Thanks to three finance options available at the end of your contract, alongside tailored deposit contributions and straightforward monthly repayments, PCP gives you full control over your outgoings.
Once you’ve come to the final stretch of your plan, simply choose to keep, trade, or even return your luxury vehicle to the dealer – letting you walk away with nothing more to pay.
Boasting great features and plenty of room to tailor your plan exactly how you see fit, PCP finance deals have been a great way to lease a prestige car without having to stump up the cash in one large payment.
Using the skeleton of the more traditional Hire Purchase (HP) finance method, the standout element of PCP is that the value of the vehicle is decided at the beginning of your contract. It is then deferred until the end, so you have all the numbers you need right at your fingertips.
This value has a set list of defining factors, such as the annual mileage limit, starting mileage, and the car’s age at the start of your contract. It’s known as the Guaranteed Minimum Future Value (GMFV) – which serves as a reminder that until you opt to pay this outstanding amount at the end of your contract, the car is not owned by you.
As with many forms of finance leasing, PCP does have the potential for financial repercussions.
As such, we advise our clients to be aware that making any alterations to the car or going beyond the outlined limits in your contract may result in repercussions that impact your finances or credit profile.
So, how is PCP finance calculated?
Worried about number crunching?
At Magnitude Finance, our team of financial experts is with you from start to finish, helping you get the very best deal for your unique plans.
Whether you’re looking to drive away happily, swap models or simply hand in the keys and call it a day – we’ll tailor our plans to suit you.
When it comes to creating a bespoke PCP plan, the first step is to pay a starting deposit. This is usually calculated as a value between 10 to 30% (as in line with industry standards) – before you pay off the outstanding amount in easy monthly payments.
The period of time you are expected to make these payments will have been pre-agreed at the start of your contract, making budgeting easy on both your brain and your wallet.
Another ‘calculated’ aspect of PCP is the GMFV – that all-important Guaranteed Minimum Future Value.
If you’re planning on keeping your prestige vehicle, then this is used as the final payment at the end of your financial loan agreement.
We consider a number of factors when it comes to determining this value, such as:
- starting mileage
- estimated annual mileage
- the age of the vehicle
As it is decided right at the beginning of your contract and only paid should you wish to own your vehicle, this number is safe from any price fluctuations, giving you guaranteed peace of mind.
This flexibility, alongside tailored deposit schemes and at-a-glance budgeting forecasting, this finance option is great for passionate car fans who would like a wealth of options when it comes to their equity and vehicles.
You’ll have plenty of time throughout your plan to decide which road you’re going to take.
At Magnitude, it’s our job to get you behind the wheel.
Can you pay off PCP early?
The power to change your mind isn’t one to be taken lightly.
We know that personal circumstances can quickly change, which may lead you to consider settling your financial commitments earlier than expected.
So if you already have an agreement in place with us, or would like to get a sense of the top-class service we provide, our finance settlement calculator can give you a realistic picture.
With PCP’s flexible nature – and as a regulated agreement under the Consumer Credit Act – you have the option of finishing your contract sooner, with our team available to help talk you through every step of the process.
What is a settlement figure?
A settlement figure (also phrased as an ‘ESF’ or ‘early settle figure’) is a value that shows the amount of money you need to end the financial contract you have with us.
There are many reasons why our clients might choose to pay off this type of finance early – and it’s not always a case of winning the lottery and wanting to wipe the slate clean!
Often enough, people want to sell their prestige vehicle or simply switch it to another model they have their eye on, which isn’t too uncommon for car fans, both old and new!
Although it’s easy to think your settlement figure is simply made up of what’s left in terms of your actual repayments – for a PCP settlement, we also have to take into account your ‘final’ payment as agreed at the beginning of the contract. This may also include further charges.
But don’t worry – getting your settlement figure is really simple.
At Magnitude, our concierge approach puts the client first, ensuring your early settlement is as smooth and seamless as possible.
To do this, we’ve invested heavily in creating innovative tools that can be used alongside our team’s keen financial minds – if we don’t say so ourselves.
This gives you everything you need to get an accurate settlement figure, including the exit fee.
If you’re keen to get moving, you can simply use our state-of-the-art calculators – including our leading settlement calculator – to help you get a quick and accurate quote in less than 60 seconds.
We’ll also give you a time period for how long this settlement figure is valid, as you’re still likely to be making those monthly repayments which will reduce this value.
But don’t sweat it if you end up taking a bit longer to consider your options. If the time lapses, all you have to do is recalculate your figure or give your dedicated Account Manager a call and we can whip up an updated settlement in no time.
Please note that our calculators do not take exit fees into account when producing a number. The best way to get an accurate expectation of this is to give us a call directly or get in touch using our simple online contact forms.
What is an exit fee?
An exit fee is an amount still owed on your finance deal, plus any potential penalties or charges that may be incurred as a result of leaving your contract early. The value of this fee usually comes to a charge of 58 days’ interest.
At Magnitude, we offer a transparent service that puts your needs first. That means we take the time to listen to your plans and can help structure multiple finance types, quotes, and settlement figures around your personal circumstances.
How do I use Magnitude’s finance calculators?
Getting an accurate finance quote has never been easier.
We know that half the stress of sourcing the best finance agreement for you and your dream car is having to figure out exactly what you’ll be paying – which can be a lengthy task for clients looking to compare different finance products!
That’s why our state-of-the-art car finance calculator can give you much-needed clarity when it comes to finding a personalised finance quote, helping you get a concrete idea of our monthly repayment plans across a wide range of prestige makes and models.
With a few simple clicks, you can get figures for hire purchase, balanced payment agreements, and PCP plans for luxury and performance cars – all you need to do is input the car details or registration and you’re away.
Got somewhere to be? No problem.
You can always opt to send your estimate to an email address with the click of a button, so you can view your tailored quotes on the go – as and when you feel like it.
So wherever you are in your journey, getting an accurate, no-obligation quote can get you so much closer to the car of your dreams.
All it takes is 60 seconds. So what are you waiting for?
Will I be able to make a finance application with bad credit?
When it comes to sourcing the best deal for our clients, this is one of the most commonly asked questions our team receives.
If you are worried about a poor credit rating and how it might impact your search for prestige car finance, don’t worry – our team is here to help.
At Magnitude, we have over three decades’ worth of experience in shaping bespoke plans to assist a wide range of clients in getting the car of their dreams. As such, we are more than familiar with brokering for an incredible customer base, offering a wealth of exclusive options and deals that can only be accessed through us.
Before we can start to formulate the best plan for you, we will always conduct a quotation credit search.
This happens before we submit to our panel of bespoke lenders, as is standard practice within the financial industry, and will only be available for you to see on your own credit profile.
Within these early stages we won’t need a strong credit score to be reflected, but as we move to make a formal proposal – a complete check will be carried out. This will determine whether our products are best suited for you.
It’s important to remember that the lenders themselves will, first and foremost, consider your ability to make those monthly repayments. As part of making luxury car finance truly affordable, your credit, income, and the likelihood of the borrower being able to service and return the debt must be considered.
This also goes for any interest or further charges that may be accrued over the course of your contract.
Other factors, such as any existing finance agreements that are still open will also sway the lender’s ultimate decision. That is why we remind all of our clients that finance can have very real financial repercussions, which may result in a poor credit score and your ability to source credit in the future.
As always, you must be sure that you can afford the payments as outlined in your contract before committing to a brokerage.
To discuss your plans and situation, why not give us a call for a no-obligation chat?
Why should I choose Magnitude Finance?
With our concierge approach, we treat each of our clients on a truly individual basis. That means we will always give you the best advice available to meet your needs.
That also means that we give you clear and concise options that will work for you in the long run. We will also support your decision should you decide that brokerage isn’t quite right for you, preferring to source a financial product straight from the dealer.
Of course, we have a truly unbeatable record of sourcing truly competitive deals, rates and a tried and trusted panel of exclusive lenders – making us one of the most popular prestige finance specialists around.
It’s no wonder that some of the biggest names in the motoring world choose us when it comes to the lowest rate finance options on the market for prestige vehicles.