Personal contract purchase

PCP has been developed and has been increasingly used since the introduction of the new company car tax rules brought out in 2002. Many individuals crippled with the Benefit in Kind tax have opted for this method of funding their cars.

As with Contract Purchase & Contract Hire, the chosen terms of the contract i.e. age, mileage and duration will determine the balloon payment.

At the end of the agreement the purchaser may pay the balloon and take ownership or simply hand the car back to the provider. Obviously, charges will be made for excess mileage and any damage, which is considered to be over and above Fair Wear and Tear.

This form of contract is between an individual and a provider and therefore the individual will not be liable to pay Benefit in Kind tax.

Benefits of Personal Contract Purchase

• Low initial deposit
• No benefit in kind tax
• Fixed payments
• Maintenance package facility
• You can drive the car of your choice
• No risk on the residual, subject to mileage and condition
• Optional final payment
• Eventual ownership if required