Personal Contract Purchase Guide


There are various advantages to personal contract hire but the only disadvantage is that you never own the vehicle outright. This is where personal contract purchase also known as PCP is a great option if you want the benefits of personal contract hire but want to own the vehicle outright at the end of the contract period.
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.
There are numerous advantages of taking out a personal contract hire agreement. These include:

  • Fixed monthly cost - this allows you to set and keep to a budget as you will know how much you have to pay out each month.

  • Flexible - allows you to change your vehicle every two to three years if you decide not to pay the balloon figure at the end of the contract agreement.

  • Premium vehicles - personal contract purchase provides you, the customer, with a range of previously unaffordable premium vehicles due to the low monthly payments.

  • No depreciation risk - this is because you can choose whether you wish to buy the vehicle at the end of the contract. If you choose not to purchase, you can walk away from any resale risk.

  • Maintenance - Gateway2Lease offer optional maintenance packages that can cover basic servicing or fully maintained packages that cover servicing, repairs and tyres.

  • Benefit of driving a new vehicle - the newer the vehicle, the better the fuel economy. This is because of the most up to date engine technology. You will also benefit from the latest safety features as well as lower C02 emissions.
There are a couple of points that need to be kept in mind when thinking about taking out a personal contract purchase agreement. These include:

  • Fair wear and tear - you must ensure that the vehicle is maintained and kept within the guidelines for acceptable fair wear and tear during your contract. Any unacceptable damage on the vehicle at the end of the contract will be charged to you, the customer, as you will be liable for all repairs.

  • Mileage - you must keep within the mileage set out in your contract agreement. If it is exceeded, you the customer, will be liable to pay the excess mileage charge to the finance company at the end of your contract.

  • Insurance - this is not included within your contract and therefore comprehensive insurance must be arranged.

Other personal finance products you may be interested in are:

personal operating lease guide
Benefits of a personal operating lease include fixed monthly payments and you are the registered keeper of the vehicle.

Learn more

personal contract hire guide
Personal contract hire is the most popular type of finance for individuals. Benefits include fixed monthly rentals and low initial payments.

Learn more