If you want to buy a car but aren't sure if a new car is worth it, you might want to think about the benefits of getting a personal contract purchase loan. Getting a personal contract purchase loan can help you get the car you want and cut down on the amount of depreciation you have to deal with. Here is more information about how a personal contract purchase loan can be used to buy a car.
What's a PCP?
A personal contract purchase loan, or PCP, is a personal contract between two people. It lets you set up a payment plan for your new car with monthly payments. At the end of the contract period, you can either buy the car outright or return it to the contract provider.
The price of a PCP
The price of a PCP depends on the car you want to buy and how much you can put down as a deposit. It also depends on how long the contract is and on other things, like how often it needs to be fixed. But the length of the contract is usually between 24 and 42 months. During that time, you pay a monthly fee to "rent" the car.
Guaranteed future value
One benefit of a PCP is that you can agree on a minimum future value, so you know how much you will have to pay to buy the car outright at the end of the loan term. You can either pay the guaranteed value and keep the car, give it back without making any payments, or put the guaranteed value toward a new car.
Less expensive than many other ways
The main benefit of a PCP, besides being flexible, is that you have fixed monthly payments that are likely to be less than other ways to pay for a car. Also, if you get a PCP that includes maintenance, you won't have to worry about paying a lot for repairs like you might with a used car. Also, depreciation is lower because you know what the item will be worth in the future.
Giving up the car
During the term of the contract, you do not own the car. This may be the biggest problem with a PCP. You're just renting the car from the company, so if you don't pay your bills, the car can be taken away from you. Before you get a PCP, make sure you can pay the monthly payments so you can keep the car you want.
Less costly than a loan
PCP is a cheaper way to pay for a car than a loan, even though you don't own the car during the contract term. Even if you get a very low interest rate, you will pay more and lose more. If you want to buy a car but don't want to pay for it all at once, choose a PCP.
