PCP (personal contract purchase): how it works and who it suits

How it works

Common in the UK and Ireland and spreading: you finance the difference between the price and a guaranteed future value, then choose at term end to pay the balloon, hand the car back, or roll into a new one.

Consumer-credit research on car buying finds that people anchor on the monthly payment rather than the total cost, and that term length is the lever sellers use to move one without the other ^[1]. Every structure below is judged on total cost over the period you will actually keep the car.

Who it suits

Lower monthlies than a loan for the same car, an exit if the car’s value collapses, and a built-in trade-in cycle.

The catch

You are renting the depreciation with an option, not building toward ownership unless you pay the balloon; mileage and condition charges apply on handback.

Manufacturers offering it

• Volkswagen — Volkswagen Financial Services
• BMW — BMW Financial Services
• Mercedes-Benz — Mercedes-Benz Mobility
• Audi — Audi Financial Services (Volkswagen Financial Services)
• Porsche — Porsche Financial Services
• Škoda — Škoda Financial Services (Volkswagen Financial Services)
• Cupra / SEAT — SEAT Financial Services (Volkswagen Financial Services)
• Renault — Mobilize Financial Services
• Peugeot — Stellantis Financial Services
• Citroën — Stellantis Financial Services
• Opel / Vauxhall — Stellantis Financial Services
• Fiat — Stellantis Financial Services
• Volvo — Volvo Car Financial Services
• Kia — Kia Finance
• Hyundai — Hyundai Finance (Hyundai Capital)
• Toyota — Toyota Financial Services
• Nissan — Nissan Financial Services
• Ford — Ford Credit
• MINI — MINI Financial Services (BMW Group)
• Dacia — Mobilize Financial Services
• MG (SAIC) — partner financing
• Honda — Honda Financial Services
• Mazda — Mazda Financial Services

What you control after buying

The energy line of any total-cost estimate is the one you control after purchase. Home charging on an off-peak tariff and motorway rapid charging can differ several-fold per kilowatt-hour, so where you charge on long journeys moves the annual number more than the badge does. Drive Charge Eat plans stops around cheaper, reliable chargers that also have somewhere to eat.

Other structures

• Cash purchase — You pay the full price and own the car outright from day one.
• Bank or credit-union loan — A lender advances the price; you own the car and repay over a fixed term.
• Manufacturer (captive) financing — The brand’s own finance arm — Tesla Financing, Volkswagen Financial Services, Ford Credit, Toyota Financial Services and peers — lends against its own cars, often with promotional support baked in.
• Lease / PCH — Pure rental over a fixed term and mileage: no option to own, lowest commitment to the asset.
• Salary sacrifice — Mostly a UK structure: the employee gives up gross salary for a leased car through the employer, paying tax only on a low benefit-in-kind value for EVs; specialist providers such as Octopus Electric Vehicles and the leasing majors administer schemes.
• Car subscription — A rolling monthly fee bundling car, insurance, tax and maintenance with short commitment; offered by some manufacturers (Volvo pushed it early) and independents.