Personal Contract Purchase (PCP)
PCP is a flexible funding solution that delivers peace of mind by guaranteeing a future value for your car. PCP is designed to keep your fixed monthly payments lower compared to other types of financing like Hire Purchase.
How PCP works
Watch our short video to learn more about PCP.
Who is PCP for?
PCP could be right for you if you’re looking for typically lower monthly payments than Hire Purchase (HP), prefer to change your car every 2–4 years, and want the flexibility of three options at the end of your agreement.
How PCP works
Choose the car you want and agree how much deposit you would like to put down.
Step 1
Estimate how many miles you will drive each year and agree how long you would like your agreement to run, between two and four years. It’s important to be as accurate as possible with your mileage estimate. We’ll then use this information to calculate a Guaranteed Future Value (GFV) which is our prediction of what your car will be worth at the end of the agreement. The GFV is deferred until the end of your agreement.
Step 2
Your monthly payments are worked out on the difference between the GFV and the price of the car, once your deposit has been deducted and interest added. This means you’ll typically have lower monthly repayments than with Hire Purchase.
Step 3
At the end of your PCP agreement you’ll have the flexibility of three options: return the car, pay the GFV to own it, or part exchange for a new Honda.
End of contract options
Return the car
As long as you're up to date with your monthly payments, you can hand your car back to us without paying the final payment (GFV). If you have exceeded your agreed mileage or the car is not in a good condition, then there may be additional charges to pay. Please contact us on 0345 128 8909 to discuss.
Retain the car
You can keep the car. Pay the final payment (GFV) and the £10 option to purchase fee and you will own the car outright.
Renew the car
You can part exchange your car and subject to market conditions, this should cover the amount of the final payment (GFV). Then together with your Honda retailer, you can start looking for your next Honda.
Don't worry... we'll write to you towards the end of your agreement and remind you about the options available to you.
Key features
- Typically lower monthly payments than Hire Purchase (HP).
- Guaranteed Future Value (GFV) protects against depreciation.
- Three end of contract options: return, retain, renew.
- Fixed interest rate for the duration of your agreement - monthly payments do not change.
- 14 day right to withdraw.
- Can partially or fully settle early (subject to the terms of your agreement).
- You have the right to Voluntary Termination if your circumstances change.
Key considerations
- To own the car outright, you will need to pay all regular payments, the GFV and any option to purchase fee.
- Mileage limit applies — charges per mile plus VAT if exceeded.
- There may be additional charges if you decide to return your vehicle to us.
- The Total Amount Payable is likely to be higher than a Hire Purchase (HP) agreement.
- You are not guaranteed to have any equity at the end of the agreement.
- If you choose Voluntary Termination, you will be required to pay any amount needed to reach half of the total amount payable under the agreement. If this amount cannot be paid in full, the outstanding balance may be recorded as a default on your credit profile.
Compare finance options
See how Personal Contract Purchase compares to Hire Purchase side by side.
New car finance offers
View the latest offers available on our range of new cars.
Download brochure
Download our Product Guide for a full explanation of our finance products - including how they work, what to expect during your agreement and your options at the end.
Related FAQs
What is an Optional Final Payment (also known as the Guaranteed Future Value (GFV) or Balloon Payment)?
You select a term and an annual mileage and based on this we’ll calculate what we think your car will be worth at the end of this term. This amount is the GFV and is deferred to the end of your agreement. Your monthly payments are worked out on the difference between the GFV and the price of the car. This means you typically have lower monthly payments than with Hire Purchase. At the end of the agreement you have the flexibility of three options.
What counts as fair wear and tear?
Fair wear and tear occurs when normal use causes acceptable deterioration to the car's condition at the end of a contract or finance agreement. Fair wear and tear is not to be confused with damage, which occurs as a result of a specific event or series of events. These include impact, harsh treatment, negligent acts or failure to service the car in accordance with the manufacturer’s recommendations and any applicable warranty. For full information please see our Fair Wear and Tear Guide
Can I end my PCP agreement early?
Yes. You can settle your finance agreement at any time.
There is no penalty for settling early. Please call Customer Support on 0345 128 8908 and we will be happy to give you a settlement quotation.
You can make lump-sum repayments as often as you like or pay off the whole amount early. This could reduce the amount of interest due – in which case, you’ll get a rebate based on a statutory formula set out in the Consumer Credit Act 1974 (CCA).
If you have a Personal Contract Purchase agreement and make a lump-sum payment, you have three options: reduce the final amount due at the end of the agreement, reduce the term of the agreement, or reduce your monthly payments.
What if I go over my contracted mileage?
Mileage allowances are agreed with you prior to entering your agreement. Where the mileage allowance has been exceeded and you chose to return the car at the end of your PCP agreement, charges are applicable on a per mile [+ VAT] basis. This charge is due upon returning the car. Please note, it is important to be as accurate as you can when setting your annual mileage for your PCP agreement. This will reduce the likelihood of incurring excess mileage charges.
PCP is available on used Honda cars too
Browse Approved Used Honda cars and view finance examples based on available stock and retailer offers.