king to buy a car but are unsure whether or not a
new car is worthwhile, then you should consider the benefits of
buying a car with a personal contract purchase loan. Using a
personal contract purchase loan can reduce the amount of
depreciation you suffer, and help you to get the car you want.
Here is some more information about buying a car with a
personal contract purchase loan.
What is a PCP?
A PCP, or personal contract purchase loan, is a personal
contract for private individuals. It allows you to set a
contract term with monthly payments for your new car. At the
end of the term you can either purchase the vehicle fully or
give it back to the contact provider.
Costs of a PCP
The costs of a PCP depend on the car you are buying, and how
much deposit you can afford to put down. It also depends on the
length of the contract, as well as other factors like
maintenance requirements. However, the length of the agreement
will usually last from 24-42 months, during which time you pay
a monthly cost as a =EBrental’ of the vehicle.
Guaranteed future value
One advantage of a PCP is that you will get a minimum
guaranteed future value agreed, so that you know how much you
will have to pay at the end of the loan term to buy the car
outright. You can either pay the guaranteed value and own the
car, hand it back without any payments, or use the guaranteed
value towards another new car.
Cheaper than many other methods
Apart from flexibility, the main advantage of a PCP is that you
have fixed monthly payments that are likely to be lower than
other forms of auto finance. Also, if you get a PCP with
maintenance included you will not have to worry about large
repair costs like you might with a used car. Also, depreciation
is lower because you have a guaranteed future value.
Losing the car
Perhaps the biggest disadvantage of a PCP is that during the
contract term you do not actually own the car. You are simply
leasing it from the provider, so if you should fail to make the
payments the car can be taken away from you. Before taking out a
PCP, make sure you can afford the repayments so that you will be
able to keep the car you want.
Cheaper than a loan
Although PCP means you don’t own the car during the contract
term, it is much cheaper than a loan for financing a car. Even
if you get a very low rate, you will pay back more and the
depreciation will be higher. If you are looking to buy a car
and you don’t want to pay outright, then go for a PCP.
About The Author: Peter Kenny is a writer for The Thrifty Scot,
please visit us at http://www.loanwize.co.uk and
http://www.thriftyscot.co.uk/Loans/How_do_I_get_a_Loan_if_I_have_Poor_Credi
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