Now a very established form of funding your vehicle, a PCP takes the future guaranteed value (GFV) out of the repayment schedule. This usually results in lower monthly repayments or customers can afford a higher specification vehicle. It means you pay a deposit, the vehicle’s GFV is removed from the calculations and your monthly repayments (usually 24-months, 36-months or 48-months) are set with a fixed APR.
At the end of the agreement you have three choices:-
- Pay the GFV and own the car outright
- Use any available difference between the GFV and the car’s market value as a deposit on a new car
- Hand the keys back to the dealership with nothing else to pay as long as the car is in good order and repair and
the maximum mileage has not been exceeded