PCP Car Finance

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Rates from 7.9% APR. Representative APR 22.09%

Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

What Is PCP Finance?

If you need a car on PCP finance then look no further, because Car LoansUK has got you covered.

PCP (personal contract purchase) car finance is a form of loan agreement that allows you to purchase a car.

Not to mention the difference between using a PCP loan to buy a vehicle and a typical personal loan. Is that the loan doesn’t pay off the full value of the car. Because you won’t own the car once you have made the final payment. Unless you make an additional optional final repayment. The payment is then calculated again using GMFV. GMFV is an estimate of what your car will be worth at the end of a PCP contract. 

However, this is usually reflected in lower monthly repayments. Additionally, we at CarLoansUK will compare PCP car finance deals and find the perfect vehicle as well as the perfect PCP finance quote to suit you. 

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Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

How Does PCP Finance Work?

The Initial Deposit

Deposits are beneficial to the car finance applicant, this is because your monthly repayments will be lower when you actually secure your car on PCP finance.

Repayment Plans

Your monthly payments will be lower than an HP finance agreement. Your monthly payments are also fixed and won’t change.

Contract Completion

Upon completion of your contract, you will then have a number of different options available to you. Which we will state below.

Is PCP car finance the right choice for you?

This is similar to a hire purchase contract, but with PCP, you tend to have lower monthly repayments. However, it’s best to remember that the full amount payable is usually higher.

PCP works by having a loan for the difference of the car’s price at new and the anticipated value once the agreement is completed. Moreover, a forecasted annual mileage is used over the contract period.

PCP finance does tend to be one of the more complicated car finance options on the market. However, it is still one of the more popular options alongside HP car finance. PCP could be an attractive option for those who do not wish to keep the vehicle at the end of their car finance contract. 

Car dealerships offer different APR interest rates. Because sometimes great PCP car finance deals are particular to a specific car manufacturer. Your credit rating also influences the interest rate. (Approximate) APR interest rates for finance applicants with a solid credit rating range from 4-8%. APR interest rates can go up to 50% for applicants with a poor credit rating. Also if you have a significant deposit available to spend on the car, you could attract 0% finance.

People buy cars every day. But what works for one household may not work for yours. Of course PCP finance is one option. However there are numerous other finance options available, therefore it is important to weigh up all of your options. If you wish to own the vehicle at the end of your car finance contract without paying the balloon payment. HP car finance may be a more attractive option as you will be able to own the car as soon as all payments have been made.

CriteriaPersonal Contract Purchase (PCP)Hire Purchase (HP)Conditional Sale (CS)
The Initial DepositThe Majority of Lenders Will Require A DepositOptionalOptional
Repayment PlanYou Pay Less But Have 3 Options At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your Agreement
Contract Completion• Optional Final Payment - Pay This And Own The Car

• Pay Nothing More And Hand The Car Back

• Trade The Car In, Using Positive Equity To Fund The Deposit For Your Next Vehicle.
A Small ‘Option To Purchase’ Fee, Which You Need To Pay To Become The Legal Owner Of The Vehicle (Maximum £50)No Final Payment, Car Is Yours After The Last Instalment
Fixed Monthly PaymentsYes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.

Car Finance Comparison In More Detail

At CarLoansUK, we provide numerous amounts of different finance options across our car finance brokerage site. Which then allows you to find the best way to pay with ease. Including but not limited to PCP Car Finance, HP Car Finance or No Deposit Car Finance just to name a few. Because CarLoansUK has got you covered,  don’t believe us? Then take a look at our excellent trust pilot reviews and see for yourself.

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Frequently Asked Questions

A car finance broker is essentially a middle man between the customer and the lender. A car loan finance broker will take care of all of the complicated paperwork as well as the negotiations with lenders. Which essentially means you can sit back and relax knowing that the broker is fighting your corner to get you the best deal possible. All whilst making your car finance journey as stress free as possible. Not only this but car finance brokers such as ourselves, also have deals that aren’t usually available to the general public, and to top it all off. Car finance brokers will actually charge the dealerships instead of the customer.


If you have been refused by other brokers in the past, all is not lost. At CarLoans UK we have a number of finance options for those with bad credit scores. However, you should be aware that when you apply for car finance through us, a hard credit check will be conducted, which may in turn have a negative impact on your credit score. Especially if these credit checks have been done in quick succession. So therefore it is recommended that after being declined for car finance, you should wait between 3-6 months before applying again.

If you are struggling to keep up with your car finance repayment plan. There are a number of options available to you. It is of great importance that you obtain free independent advice from one of the following charities/organisations. 

Money Advice Service

National Debt Line

Citizens Advice

Initially, applying for a car loan usually will have a negative impact on your credit score. Although, you should be aware that if you make your car loan repayments on time. This will most likely have a positive impact on your credit score.


APR stands for annual percentage rate and is the total amount charged for the lend. There are, however, two different types of APR.Exact APR in short means that the rate that is shown to you, is the rate that you will get. Whereas, representative APR however, means that 51% or more of the people who apply for the finance will receive that rate. What this means is that customers with poor credit scores could see a higher APR.

Representative APR is, for the most part, used to advertise the companies rates. After you have provided all of the necessary information to the lender, they can then offer you your exact APR rate.

What is it?

Gap insurance stands for Guaranteed Asset Protection.

Essentially gap insurance is, is a form of insurance that is designed to cover the difference between the amount your insurance provider pays out in the event of your vehicle either being written off or stolen and the price that you paid for the vehicle. You should however be aware that gap insurance works alongside your standard car insurance and is in no way a substitute.

So when is gap insurance needed?

Gap insurance can be worthwhile in several ways. Firstly, if you have taken out a big loan to buy your car. Gap insurance would be beneficial as mentioned previously if your car is stolen or written off. This is because the gap will pay off the outstanding finance.

As well as this, gap insurance could also be beneficial if you are worried about your car depreciating. A brand new car will lose between 15-35% of its value in the first year. Therefore gap insurance can help you get a bigger payout if your car is written off after it has already depreciated.

Where can I get gap insurance?

Comparing gap insurance quotes has never been easier thanks to Bright Compare!

If the vehicle is faulty on delivery, you can simply refuse the car and send it back to the dealership.

You can, however, you will have to ask the finance company for permission prior to making any sort of modifications.

It can be quite confusing, but there are three elements of the loan to keep in mind when you’re deciding if this is the right type of loan to help you to buy a car.

 Because many car dealers who offer you PCP car finance deals will expect you to pay a 10% deposit. Although occasionally there may be incentives from the manufacturer to entice you, such as a deposit contribution. This is sometimes up to £2000 and is only available if you use their finance option. Also, as with any other loan, the bigger your deposit, the less you’ll need to borrow and the less interest you’ll pay and in turn, opening yourself up to better PCP car finance deals.

Then the amount that you will need to borrow will be calculated based upon the depreciation of the car’s value across the length of your loan term. Then the deposit you put down is deducted from this amount. So, you’ll pay off the amount they calculate, minus your deposit but plus interest, in monthly payments for the length of your loan agreement. Furthermore, a loan agreement lasts for 24 to 48 months and the interest added is usually from 4% upwards.

If you decide that you want to own the car outright at the end of the deal, you can make a final balloon payment. This is also called a GFV or Guaranteed Future Value amount. Then this is calculated according to the amount that your car is anticipated to be worth at the end of your loan agreement. Of course, this is entirely optional, but the amount they set is not usually negotiable.

It is generally advisable to carry out a detailed comparison of the PCP car finance deals available to you when you’re looking to purchase a car. Because any loan you take out must be affordable and you must consider all of your essential outgoings and how this will affect them. Then failing to make payments will adversely affect your future credit options and likely cause you a huge amount of stress. Additionally, it is always advised to seek professional advice if you are unsure how to proceed.

Compare PCP car finance deal with other car financing options

You should also look ahead, to make sure that you choose the type of deal that will make it easier for you when the agreement ends. Then think about how likely it is that you will want to purchase the car at the end of the loan term, or if you will want to upgrade to another car

There are typically three options open to you when the term of your PCP car finance deal ends.

If you decide to pay the final balloon payment, then you will own the car you have been paying towards over the course of your loan term. Because most car finance contracts will include an extra fee to transfer ownership. Also the typical cost for this is about £100, but check your contract before signing if you think this is the option you might take, as it can be up to £500.

Alternatively, you can simply hand the car back to the dealer after you make your final payment. Because many people do this. Comparatively if the car is valued at a higher price than the balloon payment, you might be offered the difference as ‘equity’. Then this equity could then be used as a deposit on another new car, with a PCP finance deal. Unfortunately you won’t be offered the cash instead.

If you’re told that the car is in fact worth less than the dealer originally anticipated at the end of the deal, the best option would almost certainly be to hand the car back.

Similarly, if you want to look at completely different options for your next car, you can just hand the car back to the dealer once you’ve made your final payment. Then of course you will need to pay for any damage, however, and be prepared to pay extra if you have gone over the mileage agreed at the start of the deal.

At any point if you return the car, at the end of the deal or trading it on, there are potential charges. If you set out a comprehensive plan for usage, and think about the situations that may arise that might necessitate using the car more than usual, you can usually avoid the extra charges.

The first is for going over the agreed mileage. At the start of your application you will be asked to state how many miles you will clock up each year. The reason for this is to enable the finance company to make an accurate prediction as to the car’s eventual value once you hand it back at the end of the deal. Work this out carefully when you make your initial application since this extra charge is completely avoidable. Sometimes, for unforeseen reasons you will go over the agreed mileage. Just be aware that for every extra mile, you will probably be charged about 10p.

The second relates to damage to the car. It will be examined when you take the car back. The finance company will make reasonable allowances for everyday wear and tear that might be expected with regular usage. If they decide that any damage to the car adversely impacts their chances of reselling it, however, you may be asked to pay the amount that is needed to put things right. You can, of course, get the damage repaired yourself before returning the car. Always do this at an approved service centre to avoid any problems later on. This may end up being cheaper than paying the rate the finance company will charge. It is essential to read your contract carefully after conducting a car finance comparison and choosing the vehicle of your choice.

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Rates from 7.9% APR. Representative APR 22.09%

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CarLoansUK © 2022 All rights reserved

Car Loans UK is a trading style of Wallace Bohen Ltd, a company registered in England and Wales. (Company number: 12382512, Registered Address: 4th Floor, Kingsgate, Wellington Road North, Stockport, Cheshire, SK4 1LW. We act as a credit broker and not a lender and are authorised and regulated by the Financial Conduct Authority for consumer credit FCA no.928674. CarLoansUK can introduce customers to a limited number of finance providers based on overall credit profile and may receive a commission for such introductions, this will not impact the rate you are provided. We do not charge a fee to the customer for arranging the finance. Written quotations on request. All finance subject to terms and status Data Protection Registration No.ZA766848.

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