Personal Contract Purchase (PCP) is a finance product that allows you the opportunity to buy a new or a used car.
It is similar to a Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments over a term typically between 18 to 48 months.
What makes PCP different to Hire Purchase (HP) is that your monthly instalments are paying off the depreciation of the car, and not its entire value, over the course of the term. Then, when you get to the end of your agreement, there is a final, balloon payment that must be made if you want to keep the car. The balloon payment is often referred to also as the Guaranteed Future Value (GFV).
When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers.
We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.
At the end of your agreement you will then have three options:
Return – Simply return the car the back to us
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car
For a quotation, help, or advice contact your local dealership and ask to speak to one of our Business Managers at your local %group_name%
You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your car is worth, and what you still owe and there may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your car is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next car.
Hire Purchase is a way to finance buying a new or used car. You will normally pay an initial deposit and will pay off the entire value of the car in monthly instalments. When all the payments are made, the Hire Purchase agreement ends, and you own the car outright.
The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allows you to do just that. If you have got through two-thirds of the way through your finance agreement, the options to end the finance agreement early open up.
For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the car early.
Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the car back or you have a second option. Through a PCP agreement, you can take full ownership of the car by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.
If your SEAT is written off, your motor insurer will usually settle your claim based on the current market value of your vehicle. This could be a lot less than its original value and therefore may leave you with an unexpected shortfall.
SEAT Gap Insurance† pays the difference between the write off settlement from your motor insurer and the price you paid for your SEAT or the outstanding balance payable to the finance company, whichever is the greater amount.
If your vehicle is leased or hired, SEAT Gap Insurance will cover the difference between the write off settlement from your motor insurer and the early termination charge. This includes any rentals paid in advance as a deposit up to £2,000.
Cover lasts for 36 months and the maximum claim limit is based on your vehicle purchase price.
In addition to all the benefits of SEAT Gap Insurance, the SEAT Gap Insurance Plus† policy includes a 12-month fixed benefit. This will start once your 36-month Gap Insurance cover ends. If your vehicle is written off during the additional 12-month fixed benefit period of insurance, you would receive a fixed sum of £2,500.
With cover starting from as little as £359*, speak to your nearest participating SEAT Retailer to find the option that’s right for you.
Terms and Conditions
Please refer to the Cover Booklet for full terms and conditions, which can be found at insurewithseat.co.uk/gap-insurance
Participating SEAT Retailers only.
†SEAT Financial Services is a trading name of Volkswagen Financial Services (UK) Limited. SEAT Gap Insurance and SEAT Gap Insurance Plus are administered by Car Care Plan Limited and underwritten by Motors Insurance Company Limited.
*£359 includes IPT and is based on 36-month SEAT Gap Insurance for a vehicle priced £0 - £50,000 including VAT.