Personal Contract Purchase (PCP)

A type of leasehold arrangement that tends to be offered by car dealers on high value new or nearly new cars. A figure is agreed for what the car will be worth at the end of a period, usually three years. This is known as the Figure Guaranteed Value (FGV).

By deducting the FGV and the value of the deposit from the price of the vehicle, as well adding on the interest charge, the resulting figure determines what is paid off via monthly installments during the term of the PCP agreement. At the end of the PCP, there is the option to either pay the FGV and take ownership of the vehicle or hand it back.