Different forms of leasing we offer on used cars
Personal Contract Purchase (PCP)
A Personal Contract Purchase (PCP) is a loan secured against the vehicle, where repayments are based on part of the value of the vehicle. The finance company guarantees the minimum the vehicle will be worth at the end of the agreement known as the Guaranteed Minimum Future Value (GMFV) or Optional Final Payment (OFP). This is offset until the end of the agreement. PCP’s can run from 2 to 4 years and repayments are determined by the size of the deposit, how many miles the customer intends to do and the length of the agreement.
Lease Purchase (LP)
On a Lease Purchase (LP) an amount of the total cost of the vehicle will be deferred (estimated future resale value/ residual value) until the end of the agreement. The customer’s monthly payments will be based on the total cost less the deferred amount. The deferred payment must be paid at the end of the agreement to own the vehicle. On a LP agreement the deferred element (residual value/final payment) is estimated based on the vehicle usage, meaning the vehicle could be worth less than the lenders estimation this could result in negative equity. The difference between a Lease Purchase and a Personal Contract Payment PCP is that the deferred payment on a Lease Purchase is an estimate of how much the car maybe worth, whereas on a PCP the Guaranteed Minimum Future value (GMFV) is the minimum the car will be worth and there is no option to return the car.
Hire Purchase (HP)
Hire Purchase (HP) is a hiring agreement between the customer and the finance company. The loan is secured against the vehicle over a set period between 1 and 5 years, with fixed monthly repayments including interest. During or at the end of agreement (if the balance has been paid in full), they have the option to own the vehicle by paying an additional sum called the Option to Purchase Fee and will then own the title to the car, becoming the legal owner. The customer is the registered keeper of the car and responsible for insuring and maintaining it, but the finance company remains the legal owner until the amount borrowed has been fully repaid.