Often, customers pay a first down payment at the beginning of the agreement, which can be a cash deposit, or you can exchange your old vehicle or both in part. Once the down payment is paid and the credit contract is signed, you pay fixed monthly payments for the duration of the contract (usually between 24 and 48 months). 6. Alternatively, you can use the value of the car after paying the GVF as a deposit on a new PCP. When you first sign up for a PCP agreement, you agree with the dealer on the duration of the contract and you will get a guaranteed minimum value for the future. You see PCP offers in the left, right and center offer. Sometimes these are presented with “deposit” or low RPOs – which means you pay less interest – or even 0% RPA, which is an interest-free balance. While low interest rates are good because they reduce the total amount you have to pay, you have to consider the cost of the car for which you do not pay interest. It`s not good to get 0% APR if the car itself has a huge price, since your monthly payments could still be high. The financial company guarantees the minimum value of the vehicle at the time of the expiry of the contract (subject to mileage and condition). This GMFV is based on available market information on vehicle valuations, expected miles over the duration of the financing agreement and the duration of the agreement itself.
The most common way to finance PCP for new or used cars is usually for a financial company that works for a particular automaker or is owned by a particular automaker. But there are also many other companies that offer this form of financing, and we have our own new car buying service, where which car? Authorized resellers will offer you a personalized financing offer. Then there are your monthly payments that you usually make over a period of 36 or 48 months. Once you have reached the end of the contract, you have the choice between returning the car – subject to additional charges for damage or exceeding your kilometre – or keeping it permanently. If you want to keep your car, you must make one last balloon payment to cover the rest of the value of the vehicle. Instead, it may be agreed that the final payment of the balloon is mandatory under the contract, but that the owner then retains the right to return the vehicle to the financing company with the previously agreed number (GMFV) instead of the payment of the balloon.  It is necessary to fully understand these aspects of a personal purchase before signing a contract, as a loss may occur there.