What is personal contract plan

A Personal Contract Plan (PCP) is a form of car finance which is in line with the principle to a Finance Lease (FL).

In a PCP you are required to only pay off the depreciation of your vehicle, instead of settling the full value of your vehicle in monthly installments. Which is to say, you might be borrowing the same amount at the start, yet you will only be repaying a portion of that borrowed amount. At the end of a PCP agreement there is still a final value outstanding which is generally known as the ‘balloon’ or the ‘buyback price’.