Finance Explained

Personal Contract Hire

  • A Hiring Agreement where the vehicle remains the property of the Finance Company
  • The vehicle is disposed of by the Finance Company at the end of the contract
  • The contract is set for a period usually between 2 & 4 years
  • The contract is for a set mileage

The customer pays a fixed monthly rental that will always include:

  • Cost of vehicle funding
  • Cost of vehicle depreciation
  • Road Fund License

For an additional Rental the customer can include the following options: All Maintenance, Service, Repairs, Tyres and Batteries*Relief Vehicle provision, recovery service*, Accidental damage, driver abuse and glass breakages are normally excluded.


  • Fixed cost motoring: The Customer only has to bear the direct costs for fuel and vehicle insurance, plus Excess Mileage charges if the vehicle exceeds the Terminal Mileage figure
  • Reduced Administration
  • No responsibility for vehicle disposal
  • Low initial outlay
  • Low monthly outlay
  • Finance charged on VAT exclusive price of new and qualifying cars


  • No equity on the vehicle at the end of the contract
  • VAT on rentals, only 50% of which is reclaimable
  • Vehicles do not appear on the balance sheet

Personal Contract Purchase

Personal Contract Purchase can be used by any individual, whether in business or not and essentially works in the following way: first you select the vehicle that’s right for you, then decide which agreement term to go for… this is either 2, 3 or 4 years. Next, simply estimate the mileage you expect to cover each year and choose a deposit you are comfortable with, including the anticipated value of any part-exchange. We would recommend that you aim to put down between 10% and 20% of the ‘On the Road’ RRP.

The manufacturer will forecast the future value of the car you’ve chosen and this is known as the Guaranteed Future Value or GFV. The GFV is the minimum value you can expect your car to be worth at the end of the PCP agreement, provided it is within the agreed mileage and in good general condition.

With PCP your monthly payments are fixed and will be less than with Hire Purchase Plans taken out over an identical term. This is because the GFV and deposit are deducted from the ‘On the Road’ RRP and payments are based on the remaining balance plus interest.

At the end of the agreement you can drive away in another brand new vehicle and this is the route chosen by many of our customers. Should you wish, you also have the option of paying the GFV (balloon payment) and keeping the vehicle or you may return it to the manufacturer with nothing further to pay.


  • Low initial deposits Ideal for opting out from the company car (no company car tax
  • Low monthly payments
  • Option to purchase or return at the end of the agreement
  • Ability to change to a brand new vehicle on a regular basis


  • APR on all monthly payments
  • Ballon payment at the end of the contract to keep the vehicle
  • Mileage limits
  • Chance of negative equity