Car Leasing has numerous advantages over buying a car outright –
the car is leased and not purchased. So what if you could combine
all the advantages of a regular car leasing deal, but also have the
option to own the vehicle outright?
Well you can, thanks to a process known as Personal Contract
Purchase (PCP). Personal contract purchase agreements are growing
in popularity and are actually a straightforward method of car
finance as this guide to personal contract purchase will
explain.
Broadly, Personal Contract Purchase (PCP) is the same as a
personal contract hire agreement – but with one key difference.
At the end of the contract, there is an optional balloon payment
that the individual can choose to pay in order to take ownership of
the vehicle. This amount is determined at the outset and allows the
driver to keep the vehicle if they are happy with it. However, it
is not essential – on the contrary, as with a personal contract
hire deal, you could choose to return the car to the leasing
company and walk away.
A mileage limit will apply to all Personal Contract Purchase
deals. This is because the leasing company will use the mileage
limit to determine the vehicle’s depreciation and therefore its
residual value. So it’s important to be honest with the leasing
company about how much travelling you are likely to do – exceeding
the mileage limit will lead to an excess mileage charge.
Personal contract purchase is seen as a direct alternative to
hire purchase and is subject to the protections set out in the
Consumer Credit Act.
For the best PCP deals in the UK, contact the Autobahn
sales team.
Email: Sales@autobahn.co.uk or call
08456 444993 option 1.
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There are many advantages to personal contract purchase
including:
- Fixed prices – You know exactly what you have to pay each
month, which can help you budget.
- Initial down-payment – Only a small deposit is required.
- Option to defer payments – If you include a balloon payment at
the end of the term, you can defer payments.
- Re-Finance – If you prefer, you can refinance the balloon
payment at the end of the term.
- Maintenance packages – Most personal contract purchase
agreements will include maintenance packages that can range from
basic servicing to total vehicle management.
- No depreciation concerns – It’s not necessary to buy the car at
the end of the term and so you can still choose to walk away
without re-sale concerns.
- Access to more ‘upmarket’ vehicles – One of the key elements of
a personal contract purchase deal is that it gives you access to
previously unaffordable vehicles due to the low deposit and low
monthly payments.
There are very few disadvantages to a Personal Contract Purchase
deal but it is usually more expensive than hire purchase
agreements. It’s also worth remembering that you will have to
arrange comprehensive car insurance as the car will not be yours
until the balloon payment is made.
For the best PCP deals in the UK, contact the Autobahn
sales team.
Email: Sales@autobahn.co.uk or call
08456 444993 option 1.
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Generally, personal contract purchase is seen as the ‘best of
both worlds’ in that you can choose to walk away from a deal, or
exercise the option to buy.
If you travel fixed distances and have a stable lifestyle, the
mileage issue should not be a problem.
Consequently, Personal Contract Purchase deals are well-suited
to people who want to drive a car and who want to keep their
options open with the right to buy.
For the best PCP deals in the UK, contact the Autobahn
sales team.
Email: Sales@autobahn.co.uk or
call 08456 444993 option 1.
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