PCP Simply explained
This short video provides a simple explanation of Personal Contract Purchase and how it works.
Similar to a Conditional Sale agreement but with additional flexibility since part of the cost is deferred until the end of the agreement which may give you the benefit of lower monthly payments. The deferred amount is known as the Guaranteed Future Value (GFV) sometimes known as Optional Final Payment.
At the end of the agreement you have three options:
1. Retain the car - Simply pay the Gauranteed Future Value, and the car is yours.
2. Renew the car - Choose another car, using any excess part exchange value that is above the Guaranteed Future Value towards your deposit.
3. Return the car - There's nothing more to pay if the car is in good condition and within the agreed mileage terms.