Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used car.
It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the car, and not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to us
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact us and ask to speak to one of our Sales Team.
You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your car is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next car.
Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.
The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
A Mazda PCP finance agreement may enable you to change your car more often. You choose your new Mazda; agree on your deposit, term and expected annual mileage; Mazda then calculate your car’s anticipated future value at the end of the contract. We deduct this Optional Final Payment from your balance, and your monthly payments are based on this reduced amount. At the end of the contract term you have 3 great choices: (i) Renew: part exchange your Mazda for a new one and use any available equity as your deposit for your new Mazda; (ii) Retain: pay the Optional Final Payment and keep the car; or, (iii) Return: if market conditions have changed, you can hand the car back to Mazda and walk away owing nothing further, as long as the car is in reasonable condition for its age and is within the agreed contract mileage.Text here ...
The benefits of PCP deals include lower monthly repayments and flexible terms, although PCP is essentially a loan, you won’t be paying off the full value of the vehicle. You will only pay the cost of depreciation of the vehicle plus interest. Therefore, your monthly payments are likely to be lower than most other finance alternatives, giving you a more affordable option to drive a new car.
Things to consider when financing your vehicle with a PCP, what is your intention for ownership? If you are looking at long term ownership then a PCP agreement may not suite your needs as you will have a final payment to make at the end of the agreement. PCP agreements also have both mileage and vehicle damage conditions that may impact what you owe when you get to the end of your agreement. A Member of the team will be happy to talk you through what options could best work for you.
Yes, you can settle your PCP agreement early, speak to a member of the sales team who can better help you understand and guide you through the process.
Hire Purchase is a traditional form of finance agreement: you choose your new Mazda, agree how much deposit to pay and your finance term; your monthly payments are then based on your balance plus any interest charged; at the end of the contract when you have made your final monthly payment, the car is yours.
One of the primary advantages of hire purchase is that it eventually leads to ownership of the vehicle. Once all the agreed-upon payments are made, you become the outright owner. Hire purchase agreements often offer flexibility in terms of the repayment period. You can choose a term that aligns with your financial situation, which can affect the size of your monthly payments. Like a Personal Contract Purchase (PCP) agreement, you might have the option to settle a hire purchase agreement early. This can be advantageous if you come into extra funds and want to pay off the asset before the scheduled end date.
When choosing a Hire Purchase agreement it's important to consider the interest rates, fees, and total cost of the hire purchase agreement over its entire duration. Compare these factors to other financing options and determine which one aligns best with your financial goals and circumstances. Additionally, make sure you understand the terms and conditions of the agreement before signing, as failure to meet the terms could result in repossession of the vehicle.
Similar to a Personal Contract Purchase (PCP) agreement, you might have the option to settle a hire purchase agreement early. This can be advantageous if you come into extra funds and want to pay off the asset before the scheduled end date.