Finance

Car finance explained

Personal Contract Purchase or PCP?

You pay an initial deposit, followed by monthly instalments, but a large portion of the loan is deferred until the end of the agreement. You can pay that final sum to own the car, hand it back or start another agreement.

APR or Annual Percentage Rate?

The amount of interest you’ll pay yearly on the money you’ve borrowed, including the various fees that apply, so that you can accurately determine and compare the overall annual cost of your agreement.

Mileage allowance/Excess mileage?

A pre-agreed mileage limit imposed for the duration of the agreement, designed to protect the car’s value. The size of your deposit, monthly payments and (if applicable) final payment will then be calculated based on this.