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Personal Contract Purchase: A Flexible and Effective Route to Car Ownership From LVS

LVS' Personal Contract Purchase (PCP) arrangements offer personal customers a way to fund a new car or van in a manageable way.

If your longer term needs are to own a vehicle, then a personal contract purchase arrangement could offer a manageable way of financing your purchase. Despite its contractual nature, many agreements offer a degree of flwxibility about what happens to the car at the end of the contracted period. Your monthly payments VAT free, but if you opt for a service / maintenance package then that will attract VAT for the service element of the monthly costs.

Advantages of Using a Personal Contract Purchase Arrangement:

  • You start off with a relatively low initial payment
  • Monthly payments are fixed, helping you budget effectively
  • You don't have to fund depreciation if you have to dispose of the vehicle and end the agreement when the term is up.
  • There are options to include a aintenance and servicing package
  • You know what the Optional Final Payment (OFP) will be from day 1 of the contract
  • The OFP can usually be refinanced if need be, to help you retain ownership of the car
  • These advantages can make PCP a very cost effective method of owning a car with the ability to leave most contracts if your circumstances dictate

Disadvantages of the PCP Route to Ownership:

  • You have to for the  end of the contract and decide whether to sell the car, return it to the lessor or keep it by paying the OFP
  • Your vehicle insurance must be fully comprehensive

Important Points About Personal Contract Purchase:

Although ownership is usually the final goal of these agreements, PCP can be ideal for people who like to keep  options open at the end of their finance agreement. PCP agreements are structured so that our private customers make a starting payment when the contract is first taken out. This is followed by fixed monthly payments for the agreed period. At the end of the agreement an OFP (this is the Optional Final Payment, often called the GFV or Guaranteed Future Value) can be made which gives you final ownership of your now familiar and trusted car .

Your other options at end of contract include: can . Or, you can simply Finally, you can keep the vehicle either by paying the OFP in full or you will find that most companies offer the opportunity to re-finance the OFP.

  • Trade-in the car at dealers and obtain a new one from them. (If the trade-in value is larger than the OFP you will be able to use the difference towards the new vehicle's deposit.)
  • Return the vehicle to the funding company. (Providing the mileage limit hasn't been exceeded; the vehicle is in an good condition for its age and has been well maintained;  there would be no further charge)
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