Personal Contract Purchase is highly attractive and increasingly popular. It combines low, fixed monthly payments with exceptional flexibility at the end of the agreement.
 
Your cars guaranteed future value is calculated (based on agreed mileage and age) and becomes deferred as a final payment (balloon).
 
PCP is ideal if you're opting out of a company car scheme. You use your company car allowance to fund your PCP monthly payments without paying company car tax.
 
Crucially, you don't commit to buying the car at the outset. Instead, you use it for 24-48 months, deciding at the end of the agreement what you want to do. Either:
 
Buy the car by paying an agreed minimum residual value
Part-exchange the vehicle for another
Sell the vehicle privately (settling the balloon)
Or, subject to mileage and condition, return the car with nothing more to pay (e.g. if depreciation resulted in negative equity)

Hire purchase with a balloon offers lower monthly payments than normal hire purchase. Instead, at the end of the agreement, you can make a final lump sum payment (or 'balloon') to own your car.
 
It's fixed rate finance - but with a lower fixed monthly outlay since you defer repayment of some of the borrowing. At the end of the agreement options include car purchase, refinance, part exchange or resale.
 
The deposit you pay is flexible - typically between 0-50% of the vehicle cost. The deferred balloon element is calculated on the estimated future resale value of the car.
 
The difference, plus fixed interest, is repaid in equal instalments over an agreed period (maximum period of 48 months), plus a final balloon payment.
 
WHY CONSIDER HIRE PURCHASE WITH BALLOON?
 
Low deposit - keeps valuable personal or business cash available
Lower fixed monthly payments - perfect for budgeting
A better car - lower payments can help you choose a higher specification car
Flexibility - does not compromise your other lines of credit
Assets - you gain vehicle ownership
Tax benefits - tax allowances for business users
VAT free - no VAT on payment

If you or your business normally buys its cars with cash, a bank loan, or through a traditional Hire Purchase scheme, then you may find Business Contract Hire a far more cost-effective option.
 
Not only does Contract Hire allow you to run a new vehicle for an inclusive monthly rental, but it also releases valuable capital from your current vehicle or your next potential purchase. Contract Hire means you can afford an even better vehicle than you initially thought.
 
Contract Hire can offer a package to include routine servicing and maintenance costs for a small increase in the monthly rentals. All scheduled maintenance work will be carried out by the main dealer network and at a local dealer of your choice. Maintenance packages include replacement tyres (excluding punctures), batteries, exhausts and all parts that are subject to fair wear and tear**.
 
At the end of your agreement we will arrange to collect your vehicle free of charge from your office address. Not only does this avoiding time-consuming disposal issues and any worries over depreciation of the vehicle* but allows you to make the best use of your valuable time. Annual Road Fund Licence is included in the monthly rental for the duration of the contract.
 
KEY BENEFITS OF BUSINESS & PERSONAL CONTRACT HIRE
 
A low initial outlay from just 1 month's payment
Flexible terms from 24 to 48 months
Road Fund Licence included in the monthly rental
A choice of rental period
No depreciation risks
Optional monthly maintenance packages**
The ability to forward plan
The lowest fixed monthly rentals
A simple 'hand back' process at contract maturity**
Removes time consuming disposal issues*
Makes more capital available to you
Complete peace of mind
Personal Contract Hire offers corporate pricing for private individuals
Business Contract Hire offers the ability to show the vehicle off your balance sheet
Business Contract Hire allows a proportion of the rentals allowable against tax***
Business Contract Hire offers allows VAT to be reclaimable on the rentals***
* Excess mileage and vehicle damage charges other than fair wear and tear may be payable.
** Subject to terms and conditions of the agreement.
*** VAT registered businesses*, VAT is reclaimable on the rentals, based on 50% of the VAT on the capital element (assuming an element of private use) and 100% of the VAT for any maintenance charges.