When it comes to the end of a Personal Contract Purchase (PCP) agreement, there are a few options to consider. A PCP agreement is a type of car finance agreement that allows you to pay for a car over a set period of time. At the end of the agreement, there are a few routes you can take. Here’s what you need to know.
Option 1: Return the Car
If you don’t want to keep the car and you’ve made all the monthly payments, you can simply return the car to the dealer. Generally, you’ll need to make sure that the car is in good condition and has not exceeded the agreed mileage limit. If the car has been damaged or exceeds the mileage limit, the dealer may charge you a fee.
Option 2: Keep the Car
If you want to keep the car, you’ll need to pay the balloon payment. The balloon payment is a lump sum payment that is due at the end of the agreement. This payment will be outlined in the agreement and can be quite substantial. Once you’ve made the balloon payment, the car is yours to keep.
Option 3: Trade-in the Car
If you want to get a new car, you can trade-in the car at the end of the PCP agreement. This is a good option if you want to upgrade to a newer model or a different car altogether. When you trade-in the car, the dealer will pay off the remaining balance of the agreement and any equity in the car can be used as a deposit for the new car.
Option 4: Refinance the Car
If you’re not ready to make the balloon payment but still want to keep the car, you can refinance the car. This means that you’ll take out a new finance agreement to pay off the remaining balance of the PCP agreement. This can help spread the cost of the balloon payment over a longer period of time.
In conclusion, when it comes to the end of a PCP agreement, there are a few options to consider. You can return the car, keep the car and pay the balloon payment, trade-in the car, or refinance the car. It’s important to review your options and decide which route is best for you based on your financial situation and future plans.