A PCP (personal contract purchase) is a convenient way to purchase your next car. Rather than paying a lump sum upfront, you’ll be able to spread the cost over three to five years; then keep the vehicle at the end of the contract if you wish.
However, there has been a rise in mis-sold PCP deals in the last few years, with some experts speculating that this might be the next big mis-selling scandal. If you’re thinking about buying a car with a PCP, here are some questions you need to ask first.
Questions to ask about your PCP
What are the monthly repayments, and how much will you be paying in total?
When signing up for a PCP, it’s vital to pin down exactly how much you’ll be spending each month. Ask to see a breakdown of the costs, and the overall total at the end of the contract. It’s also worth asking if there are any other fees or hidden costs that you need to be aware of.
What are the mileage limits?
As part of the PCP deal, you’ll be given an annual mileage limit. If you exceed this, you’ll be asked to pay a penalty fee. Before agreeing to the terms, establish how many miles you’re allowed to drive per year, and whether this is feasible, in terms of your lifestyle and business requirements.
What counts as ‘excessive wear and tear’?
At the end of the contract, the vehicle will be examined for signs of ‘excessive wear and tear’. If it’s decided that the car has been excessively damaged, you’ll be charged a fee. However, ‘wear and tear’ is a nebulous term. It could mean severe scratches to the paintwork, for example, or just a few minor marks!
When you’re signing up for a PCP, request some written examples of exactly what constitutes ‘excessive’ wear and tear. You can use these for reference if there is any damage to your car at the end of the contract.
What type of insurance is required?
Some PCP plans require you to take out comprehensive car insurance, which is often the most expensive. Find out what your insurance will cost before signing on the dotted line.
What will happen at the end of the agreement?
Usually, you’ll be given a choice:
- Return the vehicle
- Pay the pre-established resale value to keep it
- Use this resale value to put towards purchasing another car on a fresh PCP plan
If you think that you’ll want to keep the car after the contract is up (or use the resale value to get a new model), it’s vital to find out exactly what the GMFV (Guaranteed Minimum Future Value) will be. This will tell you how much you must save up to keep the car, or swap it as part of a new contract.
What about car servicing?
Some PCP deals also have rules regarding the servicing of the vehicle. Again, make sure you ask before agreeing to the terms of the contract.
Avoid mis-sold PCPs
Asking the right questions at the start will minimise the chances of problems further down the line. If you’ve already got a PCP and you’re worried that you’ve been a victim of mis-selling, get in touch with our team today on 0808 163 1659 or email firstname.lastname@example.org.