Life Motor Talk

Saturday 19 October 2019

Things to ask before buying a car on PCP

With more than 30pc of new cars sold on Personal Contract Plans (PCPs), the Competition and Consumer Protection Commission (CCPC) are advising consumers to be prudent when choosing the best finance option. Stock photo
With more than 30pc of new cars sold on Personal Contract Plans (PCPs), the Competition and Consumer Protection Commission (CCPC) are advising consumers to be prudent when choosing the best finance option. Stock photo

Geraldine Herbert

With more than 30pc of new cars sold on Personal Contract Plans (PCPs), the Competition and Consumer Protection Commission (CCPC) are advising consumers to be prudent when choosing the best finance option.

The idea of a PCP is simple: buyers put down a deposit or trade-in their old car, followed by monthly payments made over three years and are given a 'guaranteed minimum future value' (GMFV) by the dealer at the outset, which is the amount required to purchase the car outright at the end of the contract. In an ideal situation the value of the car at the end of the contract will exceed the GMFV and the excess will fund the buyer's deposit for another new car without having to put any other money towards it.

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Although a popular way to finance a new car, the CCPC has found that there are some misconceptions among consumers about PCPs, so before signing on the dotted line buyers need to be aware of the potential benefits and the pitfalls involved.

5 Questions to ask before buying a car on a PCP

What are the mileage limits and what are the penalties if you go over them?

What are the rules around making modifications to the car?

Are there rules around servicing the car?

Are there rules around what type of insurance you need to take out? For example, most PCP agreements highly recommend that you take out comprehensive insurance.

At the end of the agreement, will you be able to pay the GMFV or have enough money saved for a deposit for a new PCP?

Sunday Independent

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