Typical Pcp Agreement

If you paid less than half the pcp price of the car, you can terminate your contract and return the car, and you will only be liable for the difference between what you paid and half the price of the car`s PCP. You do not have to pay half the price of the PCP to the financial company before terminating the agreement under the rule. However, you have to pay the difference between the payments you have made so far and half the price of the PCP. They are also responsible for the cost of all necessary repairs. A PCP is a certain type of financing that resembles a standard lease-sale (HP). Many of HP`s laws also apply to PCPs, for example. B the third rule and the half rule. However, the main difference is that you pay less of the amount owed during a PCP agreement than with HP, which means that at the end of a PCP agreement, you still owe a considerable amount. The main features of PCP are a „pre-end“ customer deposit and a final „balloon“ payment. These well-known terms describe the lump sum payments made by the customer at the beginning and end of the life, the result being generally much less than that of a rental contract (HP) for a car of the same value. High levels of GMFV may mean that you have less money to go into the deposit on a new car than you might hope at the end of a PCP agreement.

While it may be useful to use the difference between the value of the car and the GMFV as a deposit on a new PCP deal, there may be a feeling of doing so. The PCP is one of the least flexible forms of automotive financing. Since refunds are set for the duration of the agreement, you generally cannot increase your repayments every month if you want to extend the life and, if you wish to extend the duration of the agreement, you can charge a rescheduling fee. There may also be other restrictions, such as. B exceeding a certain mileage limit and obligations regarding the wear and maintenance of the car that you must accept. There may also be penalties if you try to terminate the PCP agreement prematurely. With a PCP, you can terminate your contract at any time and return the car and pay half the price of the PCP — that`s what the „half rule“ is called. one. At the end of your agreement, if you decide to sell your car to either a car dealership or privately, the difference between the sale price of the vehicle and the agreed GMFV is designated by your equity. This is not an option for many people, so it is possible to partially sell or exchange your PCP car with the agreement of your lender, who will remain the owner of the car until the agreement is reached. This is usually organized through a car dealership.

PCP agreements are generally concluded over three years, although 24- and 48-month agreements are also available.

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