How PCP car finance works
A PCP separates the car’s price into an upfront deposit, monthly payments and a deferred final amount.
Personal Contract Purchase is a form of vehicle finance designed around a deferred final value. You normally pay a deposit, make monthly payments for a fixed term and then decide what to do with the vehicle at the end. MoneyHelper describes the final deferred amount as the balloon payment, based on the vehicle’s Guaranteed Minimum Future Value (GMFV).
The four figures to find in your agreement
Deposit: the amount paid at the start. Monthly payment: the regular scheduled payment. Term: how long the agreement runs. Balloon/GMFV: the large optional final payment if you want to own the car. Your agreement should also show a Total Amount Payable and other fees.
Why PCP monthly payments can look lower
Part of the vehicle’s value is deferred to the end rather than being cleared through the monthly payments. That does not mean the deferred amount disappears: if you choose to buy the car, you generally need to pay the balloon amount and any applicable option fee.
What happens at the end?
The usual routes are to return the vehicle subject to the agreement’s mileage and condition terms, pay the final amount and keep it, or change vehicle through another transaction. Treat a dealer part-exchange proposal as a new commercial transaction, not an automatic right under the PCP.
Can you leave before the end?
Potential routes include asking the lender for an early-settlement figure or considering statutory voluntary termination if the agreement and circumstances qualify. These are different mechanisms and the figures are not interchangeable.
Primary and consumer sources
Your signed agreement and current lender figures control contract-specific amounts.
Last reviewed: 5 September 2026