Personal Contract Purchase Explained

Term

What you need to know

Duration of Agreement

The total duration of your agreement in months.

First Payment

The first amount you pay after taking delivery of your vehicle, usually one month after the finance agreement starts.  This is then followed by your normal monthly payments.

XX Monthly Payments of

The amount you pay per month of your finance agreement. These payments pay off the depreciation of the car (the difference between what the car is worth at the start of your contract, and what it will be worth at the end of your contract) rather than the total value of the car.

Optional Final Payment/
Balloon Payment/
Guaranteed Future Value (GFV)

At the beginning of your PCP contract, the value of the car is estimated – this is the expected value of the car when your contract finishes. This is what you pay if you choose to keep the vehicle at the end of your finance agreement.

On the Road Price/
Cash Price

The total amount your vehicle is worth if you were to purchase your vehicle outright.

Customer Deposit/
Deposit

The total amount you put down as a deposit for your finance agreement. The deposit you put down will have an impact on your monthly payments; the higher the deposit, the lower the monthly payments will be. You will not get your deposit back at the end of the contract.

Deposit Contribution / Dealer Deposit Contribution / Manufacturer Deposit Contribution

The total amount your dealer (JCT600) or Manufacturer (i.e. Audi) will put down towards your finance agreement for you.

Amount of Credit

The total amount you are borrowing on your finance agreement.

Option to Purchase Fee

An additional fee which is usually paid for at the end of your finance agreement, to enable the transfer of ownership to you, from your financial provider. The value of this fee is reflected in the total amount payable and APR.

Total Amount Payable

The total amount you will pay to purchase your vehicle on this finance agreement. It includes your deposit, any monthly payments, any Option to Purchase Fee and the Optional Final Payment.

Miles per Annum

Your contract will have an estimated mileage per year, e.g. 6,000 miles per year (24,000 miles over a 4 year contract). The estimate is used to work out the likely future value of your vehicle at the end of your agreement. As long as you do not drive more than 24,000 miles, there will be no mileage charges at the end of your contract.

Excess Mileage Charge

The amount in pence per mile that you will pay for any exceeded mileage. This is only applicable if you choose to return the car at the end of your agreement.

Fixed Rate of Interest

Rate of interest on the amount of credit per annum, fixed for the duration of the agreement.

Representative APR

The APR you are being charged for your finance agreement.

Equity

The car’s equity is calculated using any positive difference between the GFV and the actual value of the car at the end of your contract. If your car is valued higher than the GFV at the end of the contract you can use this equity as credit to put towards your deposit on a part exchange agreement