What is
PCP Car Leasing?
 PCP, or a Personal Contract
Purchase is fast becoming one of the most popular ways of financing
the new car of your choice, simply due to its flexibility.
You choose
the car, the deposit, how long you want the contract to run for and
the mileage you intend to do and in return you get fixed cost motoring
for the term of the contract.
At the end of the contract you have a
choice to either buy the car outright for an agreed lump sum (the GFV
or final balloon payment), or hand the vehicle back to the lender and
walk away with absolutely no further obligation.
Why are the monthly
costs lower?
When you take out a PCP (Personal Contract Purchase), the car that you
have chosen will be given a guaranteed future value or GFV. This is a
calculation made by the lenders that is set for the period of the
contract. The GFV plus any deposit you have made will be deducted from
the cash price of the new car and your monthly payments will be
calculated based on the outstanding balance, plus interest on the
balance and the GFV, meaning that in essence you are only financing
the depreciation of the new car.
Do I need to
use your sourcing for my new car?
We always try to negotiate strong discounts on all the new cars we
supply and are happy to put together a package that includes supplying
both the new car and the finance. However, if you find a car at your
local dealer at a great price we are more than happy to broker a PCP
finance deal to suit your exact needs.
Can I only use a
PCP to buy a brand new car?
If you have found a nearly new car you can finance the purchase using
a PCP, however there are a couple of things you need to remember,
firstly the car must be supplied by a UK franchised dealership and
secondly the car cannot exceed forty eight months old at the end of
the contract. So if the car were six months old the maximum contract
length would be 42 months, a 12-month-old car could only be financed
over a thirty-six month period and so on to a maximum of twenty-four
months old with a maximum mileage of 24,000 miles.
I’m opting
out of my company car scheme (Cash for Car), is PCP suitable for me?
PCP is an extremely useful tool if you are a company car driver that
has decided to opt out of your company car scheme (Cash for Car), this
is because you can use your company car allowance or your mileage
reclaim allowance to fund your monthly payments for your PCP contract
and you avoid paying over the top company car taxes.
Is it
possible to make the monthly cost even lower?
As with any large purchase there is no substitute for doing your
homework. Because you are financing the depreciation of the new car,
try and choose a car that holds its value well over the period of the
contract. Look at financing the vehicle over the forty-eight month
period, this can lower your monthly payments substantially. Increase
your deposit (if possible) as this can also dramatically reduce your
monthly payments. Finally calculate your annual mileage accurately, if
you only do 5,000 miles per annum don’t leave the annual mileage
figure at the preset 10000 miles, this will lower your GFV and you may
end up paying more per month unnecessarily. If you can’t find your
exact mileage on our PCP finance calculator, give us a call
and we will be happy to give you a live quotation to your
exact specifications.
What are
my options at the end of the contract?
This all depends on your own personal circumstances, however you will
have four different options:
Return the car to the finance company. Subject to you not having
exceeded your total agreed mileage and the car being in good condition
you can hand the car back to the lender and walk away with nothing
extra to pay.
If you want to keep your car it's quite simple, all you need to do is
pay off or refinance the GFV or final balloon payment.
Use your car as a part exchange for a new contract. As long as the
trade in value is higher than the GFV, the difference can be used
towards a deposit for your next contract.
Prior to the end of your agreement you can apply to the lender to sell
the car privately, any profit over and above the GFV can then be kept
by you.
What
happens if I exceed the total mileage agreed?
When you agree to the PCP contract, you decide the total mileage for
the period of the contract. If you are wishing to hand the car back to
the lender and you have exceeded the mileage you agreed upon, you will
be charged a fixed amount (fixed at the start of the contract) for
each mile over and above your contracted total mileage. If you are
keeping the car and wish to pay the GFV there is no penalty for
exceeding the total mileage.
What about
natural wear and tear on the new car?
To put it simply, normal wear and tear means that for the age and
mileage of the car it is in fair working order, repair and condition.
However, as with any car purchase when it comes to the time when you
want to sell the vehicle, the better condition your car is in, the
more money it will be worth, so it is definitely in your own interest
to keep the cars “wear and tear” to a minimum and try not to exceed
the agreed mileage. The better the overall condition of your car, the
higher the chance of your vehicle being worth more than the GFV,
giving you the opportunity to recoup as much money as possible. A
detailed set of terms and conditions will be supplied by the lender to
you at the beginning of your contract.
Benefits of a
PCP (Personal Contract Purchase)
- Little or no initial
deposit
- Reduced monthly
payments due to the deferred GFV
- Fixed interest rates
for the duration of the contract
- Fixed cost motoring
for the duration of the contract
- No risk of negative
equity – GFV guaranteed by lender
- An option to own the
car at the end of the contract – just pay the GFV
- New and nearly new
cars available on this contract
- Fixed cost
maintenance packages available
- Gap insurance
available
What number plate will my car have?
We have 11 plate vehicles on
the fleet, as well as 60 plates, the majority of which are out on 12 month deals.
We have stock at 17 different locations across the UK, so depends on other deals between now and then, the geographic location of the customer, amongst other factors.
At the initial stage we advise to try and not get into detail on vehicle specifics as it makes the deal much more difficult to satisfy the customers exact requirement. It's for this reason we try to keep it as general as possible to start with i.e requirement for a small petrol car with a preference towards fiesta then Corsa. Once deal is quoted, we can then be more confident of vehicle availability and can discuss detail.
Sorry for the long winded response to your simple question, to which the answer is, both 60 and 11. All vehicles are new to one year old.
How many
miles are on the clock?
In addition, it's difficult to answer how many miles are on the clock
of one of the cars, for just one make and model of
a car there are well over 100 fiesta vehicles.
We would advise customers that usually the vehicles would have no more than 5,000 miles when they go out. The odd one or two might have a touch more, although the majority would have less.
The operational circumstances mean that we have to talk in general terms until order stage, otherwise if we put customers names to a specific car on each deal we quoted, and subsequently didn't go ahead, we would never have availability and have fields full of vehicles that 'might be going ahead' - it's for this reason we don't assign a registration number until order is signed.
Is 25,000
miles enough allowance and should I lease for
3 months,
6 months or
12
months?
We rarely have any problems with mileage as customers hardly ever exceed the 25k allowance; as such the excess mileage
isn't a major ‘deal breaker’. In our initial conversation with customer we carefully explain all parts of the contract to ensure that it is right for them.
We often find that when we get to a point of sending an order over (not just a quote), it is a done deal.
The main issue so far, is that to look at a 3 month deal to 12 months, when
the customer only have a specific requirement for 3 months is very difficult. If we do a
1+2 deal for a customer. Our efficiencies are excellent when the customer has a requirement for 12 months.
A good example is that of
Mr. Jamie yesterday, it came across mid afternoon wanting a 12 month deal – customer was spoken to, thrilled with the product and price, order sent over and we are arranging the deal now - all within a few hours. This is usually how our product is serviced.
The interest rate drops slightly when you look at 6 month deals, then drops further for 3 month business.
This
isn't to say that we wont look at them, we will do – although our core market is 6/12 month business, as this is the most effective route to market for us, along with the least line of resistance.
Again, we find our conversion rate is further increased when a business user requires the product. The service was initially targeted towards business users and it really does ‘hit the spot’. There is an awful lot of businesses and business users requiring vans and cars on flexible leases.
I hope this insight helps!
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