Personal Contract Purchase (PCP) has been a very popular way to finance a new car for several years. They consists of regular monthly payments (typically over 36 or 48 months), with a large final payment, often called a balloon payment.
Most agreements give three options at the end of the regular monthly payments and before the final payment is due;
- Pay the finance company the final payment and keep the car
- Give the car back under the terms of the guaranteed future value (subject to the cars condition and mileage)
- Part-exchange the car at a dealership, who pays off the final payment for you
Part-exchanging the car and starting a new PCP has always been a popular option but a combination of increased list prices and soaring interest rates means that PCP costs are on the rise. A recent report found that since 2019 some new car PCP deals have risen by more than 40%. Add to this the cost of living increases and it is estimated that over half of PCP customers now want to retain the car and pay off the balloon but not many people have the amount required in savings.
Did you know an affordable loan from Just Credit Union could help spread the cost? Find out what the end payment required is and use our loan calculator to work out what your monthly repayments would be with a loan period up to 48 months then simply apply on line.
Find out more – loans from £1,200 to £15,000
