How Do I Find the Best PCP Car Finance Deals?

Thinking about getting PCP to buy your next car? 🤔 Personal Contract Purchase deals are among the most popular financing options for UK car buyers. This is because this type of car financing allows car buyers to update their current vehicles in a more affordable way. Instead of paying a huge sum of money for a car, you get to have a new set of wheels through monthly instalments. The price of the car is spread over several months, depending on the length of your contract.

Sounds good, right? But how do you find the best PCP car finance deals? Don’t worry, we’ll help you out! 

How to Compare Car Finance PCP Deals

Wondering what’s a good interest rate for PCP car finance? While this depends on your personal circumstances, between 5% and 10% is considered a good deal.

Car finance companies often use difficult terms and jargon that leave car buyers confused and intimidated. It’s a good thing that today, it’s easy to do a quick search online and find out what each car finance jargon term means, like our blog on car finance jargon explained.

On our Carmoola blog we have articles about every aspect of car finance deals to help guide you along the way. By understanding more about the deal, you’ll be able to easily compare it with the offers of other car finance companies and know what your car finance options are PCP wise.

Check the Monthly Repayment Amount

PCP deals are comprised of your deposit, contract period, mileage allowance, monthly payment amount and full amount payable including the final balloon payment if you want to own the car at the end. Be sure to check the car finance interest rates and APRs of different PCP deals and know whether they’re fixed-rate interests or variable rate interests.

Take everything into account to ensure you're comparing similar car finance quotes. The APR is calculated in the same way for each lender and included any extra fees and charges, so is a good measurement tool. And bear in mind that the longer the contract period, the less the monthly payments will be - so you will pay more interest overall. Another good gauge to the total cost of borrowing is to look at the total amount repayable, so you can see what the total cost is going to be.  

Guaranteed Minimum Future Value

One of the things to check when comparing PCP car finance deals is the guaranteed minimum future value of the car. The GMFV is likely to remain unchanged because it is based on the duration of the finance contract and the mileage of the vehicle at the end of the contract term. Longer deals with higher mileage cost more per month because older cars with more miles won’t have a lot of value in the end. The rate of depreciation for a particular make or model will vary too, so that will have an effect on the GMFV and thus the amount of the monthly payments

Consider the Age of the Car

It’s a good option to buy a used car on finance because they’re more affordable. If you buy them at the end of your PCP deal, the balloon payment would most likely be lower than if you got a brand-new car. Older, used cars depreciate slower so the amount to pay off against the GMFV will also be smaller. 

Even if you compare this to financing a brand-new vehicle with low or no interest rates, you may discover that choosing a second-hand car is a more cost-effective option. For the same monthly cost as a new car, you might be able to get an older model but with a better engine, nicer interiors, or a higher trim level.

Double Check the Specifics of the Deal

When you compare car finance PCPs remember that not all bargains are great. That’s not to say they’re all just false advertising, however, read the fine print to determine if saving some cash in one area is offset by other costs in another. For example, 0% APR agreements are appealing, but they frequently demand a larger down payment and may have larger balloon payments at the end, as well as additional fees for extra mileage and any damage. 

Examine the overall financing costs and the cost of operating a car throughout the course of your contract. Don’t be pressured into signing a contract. Take your time and examine all factors carefully. 

Benefits of a PCP Car Finance Deal

PCP deals are great for drivers who are not yet sure about owning a car but would love to enjoy the convenience and freedom of having their own ride. At the end of a PCP agreement, you’ll be given three options to choose from. You may buy the car by paying a balloon payment, return the vehicle and not pay anything else, or use the equity of the car for another PCP deal on a new car. 

With a PCP deal, you can also get the latest model of a high-end car because the cost is spread across a series of monthly payments. The amount you have to pay would also be lower compared to financing a car through a Hire Purchase deal. This is because you’re not paying for the price of the car but its depreciation throughout the duration of your contract. That’s why you need to pay a balloon payment at the end if you want to be the owner of the car. 

You can also get a PCP deal for used cars in the UK. This is a more affordable option, especially if you have a tight budget. PCP agreements are not limited to brand new cars so feel free to shop around and look for a good second-hand car!

PCP vs. HP: Which is Better for Me?

Do you understand the difference between HP (hire purchase) and PCP car finance? If not you can check out our blog which covers PCP vs HP car finance for further details. Let’s now quickly compare two of the most popular types of car finance for UK drivers, Personal Contract Purchase and Hire Purchase. 

When financing a car, you essentially borrow the money from a car finance company. You would need to pay a deposit upfront and then repay the loan with interest through monthly instalments. You need to pay on time every time until your term is completed. If you miss several payments, you risk getting your car repossessed by the car finance company. 

Depending on the type of car finance agreement you choose the amount you pay and your choices at the end of your term will differ. We'll go over the differences here so you can figure out which one is best for you.

Hire Purchase (HP)

With Hire Purchase, you pay monthly instalments that go toward the cost of the car. You’re paying for it in affordable amounts each month while also being able to use the vehicle. Instead of paying the entire amount upfront, you'll deposit money and agree to a monthly repayment schedule and interest rate. If you choose an HP contract, the overall value of your loan will be split into instalments. 

Because HP contracts often run three or four years, you'll pay 36 to 48 payments to cover the entire cost of your vehicle plus interest. . You'll own the car after you have completely paid off all the amount you loaned at the end of the agreement. The sum you pay every month is determined by the deposit amount and the duration of your contract, as well as any interest and acquisition or contract costs.

PCP Car Finance Deals

PCP is pretty much identical to Hire Purchase because it also allows you to borrow money and pay it back in monthly instalments. An initial deposit is needed too, and you’ll also make monthly payments, just like with HP. However, unlike HP, you do not pay out the entire cost of the car in instalments. Instead, you pay off the amount that the car finance company has estimated when it comes to the depreciation of the car throughout the duration of your contract. 

Another notable difference between PCP and HP is that a significant portion of your obligation in a PCP deal is deferred until the end of the contract. Compared to HP, it usually means paying lesser monthly payments until the end of the agreement, when you settle off the remaining balance in a balloon payment.


Now that you have a good idea of the  pros and cons of PCP car finance , you’ll be more confident to shop around for the best PCP deals and ask the right questions. When looking for the best PCP car finance deal, it's important to compare like with like. You need to understand the deal inside and out so that you can make the best decision for when financing a car. 👍

At Carmoola, we don't currently offer PCP car deals UK. Check out the car finance options available, and use our calculator tool to see how much you could borrow.