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Personal Contract Purchase (PCP) finance

An alternative to Hire Purchase, with the option to own the car, swap it for another or walk away at the end.

What is PCP finance?

PCP, or Personal Contract Purchase, is a flexible car finance agreement that allows you to spread the cost of a car over a convenient length of time, typically 2 to 6 years.

With regular, fixed monthly payments you can enjoy the benefits of owning a car without having to put down a considerable lump sum upfront.

At the end of this agreement, you'll have the choice to either keep the car by paying the final balloon payment, upgrade to another car with another PCP agreement or simply give it back to the lender. Carmoola currently only offers HP car finance.

Key features of PCP finance

Money Bag Pounds

Lower fixed monthly payments than other finance options

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Flexibility to purchase the car, return it or enter into another PCP agreement at the end

Lease

Potential for upgrading your car every few years

How does PCP finance work?

PCP finance is broken down into three simple steps:

  1. Pay an optional deposit upfront, the larger the deposit the less finance (and interest) you’ll have to take on and repay in the future.
  2. You make fixed regular monthly payments throughout the agreed term.
  3. As you come to the end of the term, you have the flexibility to either:
  • Own the car outright by paying a lump-sum final balloon payment.
  • Hand it back to the lender.
  • Upgrade to a brand new car with a fresh PCP agreement.

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What are the pros and cons of PCP finance?

Benefits

  • Lower initial payments: You can drive a newer car with a small upfront deposit.
  • Flexible end-of-term options: Choose to own the car, return it, or upgrade to a new model.
  • Potential for tax benefits: Depending on your circumstances, some of your car finance repayments may be tax deductible.
  • Simple budgeting: Fixed monthly payments make it simple to plan your finances.

Things to consider

  • Sizeable balloon payment: You'll need to pay a lump sum at the end of the agreement if you want to own the car outright.
  • Mileage restrictions: Some PCP agreements have mileage limits that can affect your end-of-term options.
  • No modifications: Like HP finance you can’t make changes to your car or sell it unless you opt to own it outright at the end of your term.
  • Repossession risk: Fail to keep up with your payments, and your car could be taken back by the lender.

Out with the old. Drive in with the new. 🚘

STEP 1

Get a budget in 60 seconds

In a few questions, find out how much you can spend on your car

Step 2

Buy your car from anywhere

Pay swiftly online with your card, or by bank transfer at the showroom

Step 3

Hit the road and pay monthly

Take full control of your account in the Carmoola app

We offer hire purchase loans between £2k-40k for used cars.
Finance is subject to status and is only available to UK residents aged 18 and over.

 

Representative 15.7% APR

How does PCP finance compare to HP and Personal Loans?

 

Personal Contract Purchase (PCP)

Hire Purchase (HP)

Personal Loan

No deposit required

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Car is yours at the end of the agreement

Optional

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Fixed monthly payments

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No (final) balloon payment

Cancel

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No excess mileage charges

No mileage restrictions, so you
can drive freely without incurring 
additional fees.

Cancel

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Secured against
the vehicle

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Cancel

Available on Carmoola

Cancel

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Cancel

This table outlines features of typical agreements and may not apply to all agreement options. Speak to the lender to understand the specific details of the agreements they provide.

What do I need to apply for a PCP agreement?

Carmoola doesn’t currently offer PCP finance, however typically the application process involves the following steps. You’ll likely be asked to provide some personal information such as your name, address, income, and employment status. Next up you’ll be required to undergo a soft credit check where your credit history will be reviewed to determine your eligibility. Finally you’ll then choose the car you want and discuss the terms of the PCP agreement, including the deposit, monthly payments, and end-of-term options. Once this is all locked in, you sign your contract and that’s it!


What happens at the end of my agreement?

At the end of a PCP agreement, you’ve got a choice to make. You can either commit to your wheels and pay a large one-off balloon payment, hand the car back to the lender or pick a new car and kick-start a fresh PCP term.

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Am I eligible for car finance?

Answer a few questions to find out if you qualify for a Hire Purchase loan.

Check My Eligibilty

Rates from as low as 6.9% APR,
Representative 15.7% APR

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FAQs about PCP finance

Here are the most frequently asked questions about how PCP works. Got more questions? Head over to our FAQs page 👍

Does Carmoola offer Personal Contract Purchase finance?

No, we don't. At the moment we only offer Hire Purchase car finance.

Can you leave your PCP agreement early?

Yes, you can leave a PCP agreement early through a variety of ways however depending on your agreement terms and the route you decide to take there may be requirements to pay part of your repayment amount beforehand. You’ll of course also be required to hand the car back to the lender and pay for any additional mileage charges or if the car is damaged beyond the fair wear and tear policy.

It's best to check the terms of your agreement for specific details.

Is PCP better than HP?

Whether PCP or HP is better depends on your individual circumstances. PCP offers flexibility with its end-of-term options, while HP has the benefits of no mileage allowance restrictions. Consider your financial circumstances, desire for flexibility at the end of an agreement and driving habits to determine which option suits you best.

Can you modify a car on a PCP agreement?

Generally, you can’t modify a car on a PCP agreement, as some modifications may affect the car's value which is typically a risk that lenders are not willing to take on.

What can I do if I am falling behind with PCP car finance payments?

If you're struggling to make your PCP payments, it's important to contact your lender as soon as possible. They may be able to offer assistance, such as extending the term of your agreement or reducing your monthly payments to help ease the pressure on your finances.

 

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The Difference Between PCP vs HP Explained
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PCP vs leasing: Which is better?

When it comes to car finance, you have a range of options to choose from. And there’s no right or wrong choice; each finance agreement has pros and...

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How does Personal Contract Purchase (PCP) finance work?

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Carmoola is a trading name of Carmoola Limited which is registered in England & Wales, under Registered No. 12992987. Its Registered Office is First Floor, 1 Whittlebury Mews West, Primrose Hill, London, NW1 8HS. Carmoola Limited is authorised and regulated by the Financial Conduct Authority (Firm Reference Number: 958057), and a member of CIFAS (the UK’s leading fraud prevention service).

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