Personal contract purchase essentially works the same as a personal contract hire agreement, however there is one major difference. This is in the form of an end of contract optional balloon payment that allows you to take ownership of the vehicle. The price of the balloon payment is worked out by the finance company at the beginning of the contract. However, if at the end of the contract you don't want to buy the vehicle, you don't have to. You can simply return the vehicle back to the finance company at no further cost, providing no excess mileage charges apply and with it being returned within the fair wear and tear guidelines.
The monthly payments are based upon the initial payment and the difference between the retail value of the vehicle and it's residual value. The residual value is the vehicles future value after the depreciation is taken into account. If the residual value of the vehicle is high, the monthly payments for the vehicle will be lower. Likewise, if the residual value is low, the monthly payments will be more.
Like all other finance options, a mileage limit applies. This is due to the fact that the mileage is used to determine the vehicle's depreciation value. It is always important to be honest and tell us the amount of mileage that you expect to do during your agreement as you will incur an excess mileage charge at the end of your contract if you exceed. The excess mileage charge is set by the finance company not by Gateway2Lease.