Personal Contract Purchase (PCP) Car Finance

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Personal Contract Purchase (PCP) Explained

What is PCP Car Finance?

Personal Contract Purchase, also known as PCP, is an increasingly popular way to fund the purchase of a prestige car. Best described as the equivalent of a long-term rental, allowing you to use the car until the contract ends before deciding whether to keep it or change it.

At Oracle Finance we offer a broad range of finance products including Personal Contract Purchase.

If you’re opting out of your company car scheme, PCP is an ideal choice. Your company car allowance can fund your monthly payments, without paying company car tax.

At the end of the agreement PCP offers a number options as per below:

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Benefits of PCP Car Finance

You could benefit from any of the below…

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you choose if you want to own the car at the end of the agreement

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Set Monthly Payments

perfect for budgeting

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Low Deposit

allowing you to free up funds

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Guaranteed Minimum Future Value

protecting you from market fluctuations

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Change Cars

ability to change your vehicle more often

PCP Car Finance Explained

How Does PCP Car Finance Work?

At the beginning of the agreement, your car’s ‘Guaranteed Minimum Future Value’ (GMFV) is calculated, based on agreed mileage. This is then deferred as a final payment made at the end of the agreement, often referred to as a ‘balloon’ payment. Deferring the GMFV to the end of the agreement in this way means that your regular monthly payments are lower than those on a comparable HP agreement over the same term.

Before choosing a PCP, you need to consider the following:

  • You will need to agree up front the mileage you will cover and stay within this
  • Early termination may result in additional costs
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Current representative APR

9.9% APR

Oracle Finance is a Credit Broker and not a Lender.

This means that we deal with a wide range of financial institutions to give our customers a greater choice of competitively priced options. For your protection, Oracle Finance is authorised and regulated by the Financial Conduct Authority for the sale of consumer credit. Oracle Finance is a trading name of Oracle Asset Finance Limited.


PCP stands for Personal Contract Purchase and is an increasingly popular way to pay for car finance.
Personal Contract Purchase car finance, more commonly known as PCP, is a type of car financing that involves making monthly payments for a set period and a deferred payment at the end of the agreement, often referred to as a balloon. When you reach the end of the agreement, you have the option to purchase the car, return it, or trade it for a new one.
PCP involves a deposit, followed by fixed monthly payments. At the end of the agreement, there's a final balloon payment (optional), giving you choices of purchasing the car, returning it, or entering a new agreement.
A PCP offsets a guaranteed future value of the car until the end of the agreement, allowing you to make lower monthly payments than financing the whole car at once. It can often mean a lower deposit and cheaper monthly payments, as well as the ability to change your car more often. It also means the monthly payments are fixed for the agreed term, so you know exactly how much you are paying each month.
Yes, it's possible to settle a PCP agreement early by paying the outstanding balance, but there might be financial implications, including early settlement fees.
Yes, PCP agreements typically have mileage restrictions. Exceeding the agreed-upon mileage may result in additional charges at the end of the term or negative equity if the car is settled early.
Modifications to a car under PCP finance may require approval from the finance company, as any changes can affect the vehicle's value.
Yes, you can trade in your car during a PCP agreement by using any equity (the difference between the car's value and the remaining finance balance) toward a new deal.
At the end of a PCP agreement, you three options: make a final payment (balloon payment) to own the car, return the car to the lender, or use any positive equity toward a new PCP deal.
If you have exceeded the agreed mileage, the lender will charge you an excess mileage rate if you hand the car back at the end of the agreement. This rate will be agreed at the start of your agreement. If you think you will exceed your mileage limit, contact one of our Account Managers and we will look at the best solution for you.
Paying the guaranteed future value, or balloon payment, will mean you can own the vehicle.
The balloon payment in a PCP is the final lump sum due at the end of the agreement if you choose to own the car. It's often based on the estimated future value of the vehicle.
A PCP gives you this option whereas with a Lease you have to return the car at the end, however it depends on the individual lease agreement.
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Personal Contract Purchase (PCP) Car Finance