Ford Van Personal Contract Purchase (PCP)

PCP finance in Essex

With Personal Contract Purchase (PCP), you pay a fixed monthly fee to obtain and drive a new Transit for a typical period of between two to four years. Legal ownership is retained by the finance company that provides you with your van until you come to the end of the contract period where you have two options.

Purchase the vehicle for the price that you agreed with the finance company at the start of the contract.

If you think the vehicle is worth less than the pre-agreed price, return it to the finance company.

Advantages of Personal Contract Purchase (PCP)

  • Depending on your priorities, paying monthly to obtain a new Transit using PCP could be more attractive than buying with a loan or using Hire Purchase:
  • Personal Contract Purchase allows you to drive a new and often prestigious vehicle with a small upfront payment (typically 3 months) and most often it is significantly less each month (as much as 60%) than you would need to spend on a loan or Hire Purchase.
  • PCP exposes you to less financial risk as the contract that you sign is for a monthly payment across a lease contract term of 2, 3 or 4 years – not the cost of the entire van and the final purchase is optional.
  • Smaller initial deposit payment required for Hire Purchase or a loan, normally equivalent to three months' payments, followed by 35 more for a three-year contract.
  • PCP agreements don't need to arrange or negotiate to sell your existing PCP vehicle when you want a new van.
  • Avoid paying excessive taxes by opting out of your scheme and taking an allowance. Then, you can combine this with the reclaimed mileage to fund your PCP monthly payments.
  • PCP depreciation does not affect your investment in a Transit, but rather the investment by the finance company from whom you are leasing.

The key difference and advantage of PCP over Personal Contract Hire is that if you are considering retaining the car at the end of the contract for an extended period, you will have a predictable final payment to fund this purchase.

Disadvantages of Personal Contract Purchase (PCP)

  • The car is legally owned by the finance company and not you until the final payment is made, so you may feel a lack of 'ownership' if that is important to you.
  • You will be limited to the annual mileage you choose upfront, over and above which you must consider excess mileage fees if you decide not to purchase the car at the end of the contract.
  • If you wish to cancel your contract and return the van then there is likely to be a penalty fee that will vary depending on your agreement.
  • You cannot modify the vehicle without permission from the finance company and if you do so without permission, you will face a penalty if you choose not to buy it at the end of the contract.
  • If you are considering PCP vs. Personal Contract Hire (PCH), the disadvantage of PCP is the higher monthly payments.

Choosing the most cost-effective method of funding a vehicle for your business can be a daunting task. Our Transit Centre advisors listen to your needs and take into account your situation before recommending a funding option for you. Please call one of our team today for impartial, practical advice about financing your vehicle. We are here to help and find solutions that work for both you and your business.

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