Benefits of PCP Car Finance

• Lower deposits available.
• Flexible Term – 24 to 48 Months.
• Fixed repayments.
• Guaranteed final payment.
• Lower monthly repayments.
• Opportunity of equity.

The Audi personal contract purchase plan provides the benefits of driving a higher specification Audi for lower monthly payments, unlike traditional methods of car finance, this is achieved by deferring a percentage of the total cost of the Audi to the end of the contract, which is the guaranteed minimum future value or GMFV as its more commonly known as.

This guaranteed minimum future value (GMFV) and is the key difference between PCP and traditional forms of car financing such as Hire Purchase. The GMFV plus your deposit is subtracted from the selling price of the Audi and your monthly payments are based on the balance (plus interest on the balance and the GMFV). Effectively, you will make lower payments than traditional financing simply because you are essentially only funding the depreciation.

Excess Mileage

At the beginning of the agreement, you decide on the total mileage you expect to do. If, at the end of the agreement, having chosen to hand your Audi back to the finance company, your mileage exceeds the agreed level, you simply pay a fixed amount for every extra mile.

Wear & Tear

It is in your interest to minimise your Audi’s ‘wear and tear’ and not exceed the agreed mileage. When the agreement has finished, the vehicle may well be worth more than the GMFV, providing you with extra value. In simple terms, ‘normal wear and tear’ means that for its age and mileage, the Audi is in fair working order, condition and repair.

Benefits of PCP Car Finance

• Lower deposits available.
• Flexible Term
• Cost effective rentals due to residual values.
• No tie to mileage contract.
• Settlement can be made at any stage of the agreement.

Lease Purchase is sometimes referred to as Hire Purchase with a balloon and is structured in a similar way to Personal Contract Purchase or PCP car finance.

The customer will normally benefit from a slightly lower finance rate with a VW Lease Purchase product as there is no guarantee offered at the end of the contract, the deferred lump sum amount at the end of the agreement is known as the Residual Value (RV) or balloon, and this has to be paid by the customer for outright ownership of the vehicle. Deposits for Lease Purchase are flexible, normally a minimum of 10% and a maximum of 40% of the total vehicle price, repayment periods are taken over 3 or 4 years typically.

The Residual Value (RV) (sometimes called the balloon) at the end of the agreement reduces the regular monthly payments accordingly, thus making vehicles that traditionally have a strong Residual Value (RV) like Volkswagen, more suitable for this type of product as they make repayments far more affordable.

The Residual Values (RV) is calculated and set at the beginning of the lease purchase finance agreement but is not payable until the end of the contract, there are realistically two options for an VW Lease Purchase at the end of the term, 1. Pay off the residual value in cash or settlement by part-exchange or 2. Some lenders will allow the residual value to be spread over a secondary period and refinanced again.