Part exchange for cars on Lease and PCP
Personal Contract Hire (PCH) and Personal Contract Purchase (PCP) are two of the most popular ways to get yourself a new car, which is no surprise considering the fantastic, low deposit and low rate deals out there. However, when the time comes to sell your car, it’s not always as simple to do so when you’re on one of these contracts. So, what do these contracts mean?
30 second car valuation
Personal Contract Hire (PCH) Vs Personal Contract Purchase (PCP)
There is one big difference between PCH and PCP. With PCP you have the option to purchase the car at the end of the agreement and become the registered owner, whereas with PCH you have no option but to hand it back.
PCP often involves a final lump sum payment called a ‘balloon payment’. This payment is also known as the Guaranteed Minimum Future Value (GMFV). The amount you pay per month is determined based on how much value your car is expected to lose during the term of the agreement. If the car that you buy is expected to depreciate at a slow rate, then the monthly payments will be lower than a car of the same value that is expected to depreciate quickly. This means that there are often good deals on popular makes like Mercedes, BMW and Audi. When you come to the end of your PCP deal, if you don’t want to purchase the car you can just hand it back and walk away.
With both PCH and PCP the lender could repossess the car without a court order. But for PCP, once you have paid at least a third of the total amount payable, they can’t repossess it without a court order.
Can I part exchange my car on PCH or PCP?
PCP often involves a final lump sum payment called a ‘balloon payment’. This payment is also known as the Guaranteed Minimum Future Value (GMFV). The amount you pay per month is determined based on how much value your car is expected to lose during the term of the agreement. If the car that you buy is expected to depreciate at a slow rate, then the monthly payments will be lower than a car of the same value that is expected to depreciate quickly. This means that there are often good deals on popular makes like Mercedes, BMW and Audi. When you come to the end of your PCP deal, if you don’t want to purchase the car you can just hand it back and walk away.
With both PCH and PCP the lender could repossess the car without a court order. But for PCP, once you have paid at least a third of the total amount payable, they can’t repossess it without a court order.
Once you are able to sell the car, you may want to consider other options to a part exchange. This method of selling your car may seem like a quick and easy option, but so is webuyanycar. With a part exchange, you have to sell and purchase your new car at the same dealership, which could limit your options. Whereas, with webuyanycar, we will value your car in under a minute, buy any model, in any condition, and you will have the money in your account ready to put towards whichever new car you want.
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