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PCP Finance - The world's most popular car finance product

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PCP Finance

PCP Finance

What is Personal Contract Purchase

Personal Contract Purchase, also known as PCP, is a popular way of financing a vehicle and is usually based upon a Hire Purchase (HP) agreement. The main difference is that the vehicle’s value at the end of the agreement is calculated at the start and is then deferred. This is referred to as the Guaranteed Minimum Future Value (GMFV) and is based on various factors including the starting mileage, the user’s projected annual mileage and the age of the car.

At the end of a PCP agreement the user has three options:

  • Pay the GMFV and keep the car
  • Trade the car in and use any equity towards their next car purchase
  • Hand the car back with nothing more to pay*

*The car must be in good condition and within the agreed mileage

Under a PCP agreement, monthly instalments are based on the amount borrowed minus the GMFV.

How does it work?

You pay an initial deposit – normally 10-30% – and then the balance in fixed monthly instalments over an agreed term (24-48 months). At the end of the contract you can choose to hand the car back with nothing more to pay*, part exchange it and use any equity (the difference between the trade-in value and the GMFV) towards the purchase of your next car, or simply pay off the GMFV and keep the car.

What are the benefits of Personal Contract Purchase?

  • Flexible deposit options at the start
  • Lower monthly payments than Hire Purchase
  • Fixed monthly payments throughout the term of the agreement
  • Three options at the end of your agreement
  • Easy to budget for your next car purchase

Why choose a PCP?

PCPs are great if you want to change your car on a regular cycle and enjoy fixed monthly payments that are lower than a traditional Hire Purchase.

Things to consider

  • Charges – a PCP agreement could work out to be more expensive overall compared to a hire purchase agreement for an equivalent vehicle.
  • If you decide to return the vehicle, make sure it is in good condition as you could be responsible for any repairs if it is not.
  • Make sure you estimate your annual mileage with care as there will be charges for additional miles above the amount agreed.

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Finance Types

Hire Purchase

Under a Hire Purchase agreement, you usually pay a deposit at the start of the agreement. You then pay the rest of the value of the car in instalments, over a period of between 3 and 5 years.

Balanced Payment Plan

A Balanced Payment Plan offers the benefits of a fixed monthly payment, however tracks the changes in the finance house base rate, LIBOR or bank base, depending on the agreement.

Personal Contract Purchase

PCP is a popular way of financing a vehicle and is usually based upon a Hire Purchase agreement. The main difference is that the vehicle’s value at the end of the agreement is calculated at the start.

Specialist Facilities

We have access to a number of specialist lenders that will look at high value vehicles over £1 million, classic and exotic cars, refinancing existing deals, equity release or even assets other than vehicles.

Representative example - Mercedes A35

Representative example - Mercedes A35


Deposit £5,000
Amount of credit £24,000
Total amount payable £35,544.43
Final instalment/balloon £13,780
Interest Charges £6,534.43
Regular monthly instalment £356.69
Duration of agreement 48 months
Representative APR 8.9%
Type of interest Fixed

*This PCP finance example is for illustration purposes only, please contact one of our concierge team to get your tailored quotation.

How it works

Our finance calculator and concierge
service makes financing your car simple.

How it works

Call us and get a tailored quote on your chosen car (or apply online).


When you are happy, we’ll create and submit your application to your chosen lender.


Once approved, pay a deposit to the dealer and sign & return the finance documents to us.


We pay the dealer - you pick up your new car!

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Magnitude offer finance packages for all car brands. Dependent on age and mileage different lenders will be made available as an option for your package.

Why choose Magnitude?

  • Competitive rates
  • Wide choice of agreements and lenders
  • Expert advice
  • Fast response times
  • Ethical lenders
  • Part of DSG Financial Services – 35+ years in business