Personal Contract Purchase (PCP) is a popular way to finance a vehicle, and it can be a particularly appealing option when considering a unique vehicle like a 3 Wheel Car. This finance agreement is structured to potentially lower your monthly payments compared to traditional car loans, offering flexibility and a range of choices at the end of the contract.
How Does PCP Work for a 3 Wheel Car?
When you opt for PCP for your 3 wheel car, the finance agreement is set for a specific term and mileage. These factors are used to calculate the Guaranteed Minimum Future Value (GMFV) of your vehicle. The GMFV is a projected value of your 3 wheel car at the end of the agreement, ensuring that its worth will be at least this amount. This calculation also determines your Optional Final Payment, which is the amount you would need to pay if you decide to purchase the car outright at the end of the term.
Your initial deposit is subtracted from the agreed price of the 3 wheel car. You then make regular monthly payments which cover the cost of depreciation and interest. The interest is calculated on the car’s price minus your deposit.
At the conclusion of your PCP agreement, you have three main options:
- Upgrade Your Ride: You can use your current 3 wheel car as a part exchange for a new model, potentially entering into a new PCP agreement. Settling your existing finance is necessary before starting a new agreement, and any new finance will be subject to approval.
- Keep Your 3 Wheel Car: If you’ve grown attached to your 3 wheel car and wish to keep it, you simply need to pay the Optional Final Payment. Once this payment is made, you own the vehicle.
- Return Your 3 Wheel Car: If you decide you no longer need the vehicle or want to explore other options, you can return the 3 wheel car. As long as the vehicle is within the agreed mileage limit and in good condition (fair wear and tear is usually accepted), you will have no further obligations beyond any excess mileage charges if applicable.
Key Advantages of PCP for 3 Wheel Cars
- Potentially Lower Monthly Payments: PCP is often structured to provide lower monthly payments compared to traditional financing, making it more budget-friendly in the short term.
- Flexible Deposit Options: You typically have the flexibility to choose the deposit amount you want to pay upfront, which can further influence your monthly payments.
- End-of-Agreement Flexibility: PCP provides clear choices at the end of the agreement term, giving you the power to decide whether to upgrade, keep, or return your 3 wheel car based on your changing needs and circumstances.
- Protection Against Depreciation: The Guaranteed Minimum Future Value (GMFV) offers a degree of protection against unexpected drops in the used car market, providing peace of mind regarding your vehicle’s future value.
- Opportunity to Drive Newer Models: For those who enjoy driving the latest vehicles, PCP can make it easier to upgrade to a new 3 wheel car more frequently by entering into a new agreement at the end of your term.
Important Points to Consider
- Ownership: It’s important to remember that you do not own the 3 wheel car until all payments are made, including the Optional Final Payment if you choose to purchase it.
- Insurance: Fully comprehensive insurance is a mandatory requirement throughout the duration of the PCP agreement to protect both you and the finance provider.
- Credit Status: Like any finance agreement, PCP is subject to status and credit checks. Acceptance and terms will depend on your individual financial circumstances.
PCP can be a smart and flexible way to finance a 3 wheel car, offering a range of benefits that can be tailored to your needs. Understanding the mechanics and features of PCP will empower you to make an informed decision when considering your next vehicle.
