How to weigh up the value of PCP and Personal Car Loan finance options this summer…​

You’ve done the research, chosen the model, and decided an undying affiliation with the car that will make you happy, but now the question remains – How can you afford it? At Windsor, our business managers dedicate themselves to helping you find a way to make your driving choice affordable. Unless you’re a rare cash buyer, most likely the options available to you are PCP finance (i.e. personal contract plan), or a personal loan approved by your bank or credit union. There are grounded merits to both finance options, so the key to making a good finance decision is to match your financial capability and expectations to the advantages that each may offer. 

PCP - Personal Contract Plan

Bottom line – PCP is a flexible hire purchase choice that is adapted to facilitate a car purchase should you choose to buy. It is a flexible option for those who need to reduce their monthly outgoings for a specified amount of time, or for those who may either foresee a change in their driving requirements in the near or prospective future.

Helpful advice – PCP is a car finance plan based on what is essentially a hire purchase (HP) agreement. PCP differs from a personal loan because you are paying off the relative depreciation of your chosen car for a specified amount of time in low monthly payments, and when that agreement ends you choose to either purchase the car by paying the remainder of the balance in cash, or by paying monthly payments (plus interest) on the remaining sum. There is an additional condition to PCP in that your car must be worth at least the guaranteed minimum future value (GMFV) that you promised at the outset of your PCP agreement, when that agreement ends. Ensuring, for example that the agreed mileage threshold has not been breached, will help you to fulfill such requirements.

Personal Loan

Bottom line – The lower the APR percentage on a personal loan the less you will have to pay in total, and the better the deal for you. Also, when you pay off the loan, you will own the car in full.

Helpful advice – Be sure to ask your lender to provide the lowest APR option to you when you apply. Or apply for a prospective personal car loan when your bank or credit union runs an especially good APR personal loan offer campaign. That way, the finance is already approved and at your fingertips when you decide to purchase.

So, which will it be? Whether your choice is a Personal Loan or PCP we can offer you some great advice from our team of Business Managers. Simply complete the short form below, and we will call you back today to discuss your options.