PCP Car Finance

A Smarter Way to Finance Company Vehicles

When it comes to acquiring vehicles for your business, balancing cash flow, vehicle quality and long-term value is essential. One increasingly popular solution among UK businesses is Personal Contract Purchase (PCP) a flexible and cost-effective vehicle finance option designed to work with your company’s financial goals.

What is PCP?

Personal Contract Purchase (PCP) is a type of vehicle finance agreement that allows businesses to drive new or nearly new vehicles with lower monthly payments compared to traditional finance methods. It’s structured around a fixed contract term typically 24 to 48 months with an agreed annual mileage and a choice of options at the end of the agreement.

How Does PCP Work for Businesses?

At the start of the agreement, your business pays a deposit often as little as 10% up to 33%, depending on the provider and your preferences. This initial payment helps preserve your company’s working capital, keeping more cash available for day-to-day operations.

The monthly payments are then based on the anticipated depreciation of the vehicle during the contract term, rather than its full value. This is a key advantage it keeps your monthly outgoings lower, while still allowing access to higher-specification vehicles.

At the end of the agreement, your business has three options:

  1. Return the vehicle – Simply hand it back with nothing more to pay (subject to mileage and condition).

  2. Part-exchange the vehicle – Use any equity towards a new PCP agreement.

  3. Purchase the vehicle – Pay the final “balloon” payment (the Guaranteed Minimum Future Value) to own the vehicle outright.

Key Business Benefits of PCP

  • Preserve Cash Flow: With a deposit as low as 0%, your business can allocate funds elsewhere while still enjoying access to premium vehicles.

  • Tax Efficiency: For VAT-registered businesses, a portion of the VAT on monthly payments may be reclaimable if the vehicle is used for business purposes.

  • Drive Higher-Spec Vehicles: PCP can allow access to newer models, in some cases brand new or pre-registered models,  features also previously limited to higher grade vehicles become more accessible.

  • Lower Monthly Payments: Since you’re not paying off the entire vehicle value, monthly payments are significantly reduced compared to Hire Purchase or leasing.

  • No Worry Over Resale Value: The finance provider guarantees the value of the vehicle at the end of the term (subject to mileage and condition), protecting your business against depreciation.

  • Flexible End-of-Term Options: Whether you want to upgrade, return, or purchase the vehicle, you remain in control when the agreement ends.

Is PCP Right for Your Business?

If your company runs a fleet of vehicles or needs a few high-spec models to maintain a professional image without the large capital outlay, PCP could be an ideal fit. It’s particularly beneficial for directors, sole traders or SMEs who want predictable costs and modern, efficient vehicles without the financial burden of outright purchase.

Contact us today to talk more about PCP Finance…