What is Personal Contract Purchase?
Personal Contract Purchase is a method of purchasing a car over a period of 12 to 60 months. Instead of paying for a car in one payment you pay fixed monthly payments based on the value of the car, your annual mileage and contract length. At the end of the agreement you can pay an Optional Final Payment to take ownership of the vehicle. You essentially pay the difference between the cost of the car and what it will be worth at the end of the agreement.
At the end of the agreement you can pay an Optional Final Payment (OFP) to take ownership of the vehicle. If you choose not to pay the OFP then you just hand back the car and either enter into a new agreement or walk away.
Key points of Personal Contract Purchase
- Contracts range between 12 and 60 months
- Initial payment is low and can be increased to lower the fixed monthly payments
- You state your average yearly mileage at the start of the agreement and this is used to calculate how much your payments will be
- You choose how long the contract is and can take a choice of any new car. At the end of the agreement you can buy the car, start a new agreement or simply walk away
- Road tax is included for the first year
- Maintenance can be included in the monthly payments which would cover servicing and most tyre replacements
Things to consider with Personal Contract Purchase
- You do not own the car until you pay the Optional Final Payment
- If you hand the car back over mileage you will be charged excess pence per mile which will have been outlined to you before you signed the agreement
- Any damage which is above and beyond the BVRLA "Fair Wear & Tear" Standards will be charged to you after handing back the car