Personal Contract Purchase, usually known as PCP, is a very popular way to purchase a car that has some
great benefits. It defers some of the vehicle cost until the end of the finance agreement. The deferred
amount is known as the Guaranteed Minimum Future Value (GMFV) or
sometimes as the Optional Final Payment. Interest on this deferred amount is included in the monthly
payments that you are quoted.
You have the flexibility to choose the amount of deposit and the term of the
agreement and as this is a fixed interest loan the payments will not change during the agreement.
You agree an annual mileage as part of this agreement and it is important that this
is accurate. If you exceed the agreed mileage, and choose to hand your car back at the end of the
agreement, then excess mileage charges will apply. Your car must also be in fair condition for its
mileage. Your vehicle is at risk of repossession if you do not maintain the contractual repayments.
*At the end of the agreement you have three choices:
1. Pay the GMFV in order to own the car;
2. Hand the car back.
3. Use any value above the GMFV as a deposit against another car.
There is no guarantee that there will be any value above the GMFV.
Hire Purchase (HP)
Hire Purchase is a way to buy a vehicle with the flexibility to choose the amount of deposit and the term of
the agreement. As this is a fixed interest agreement the monthly payments will not change during the
This is an agreement secured against the vehicle and you will not own the vehicle until you have made all of
the payments, including any option to purchase fee. You can settle the agreement at any point by paying the
Your vehicle is at risk of repossession if you do not maintain the contractual repayments.