PCP: Don’t get caught out

Are there any pitfalls to Personal Contract Plans? Yes, of course there are. But they’re very clearly defined. The key to doing the perfect deal is being completely clear about what the plan entails, and being utterly confident that it meets your needs. There are two key points worth noting.

Negative/negligible equity Most riders who buy their bikes on PCP will roll their deal over to a new bike when the term comes to an end, hopefully using the equity in their deal as a deposit for the next bike. This is lovely in theory, but there is a growing trend among our four-wheeled friends for the Guaranteed Final Value (GFV) to be nighon identical to the value of the car. Bang goes your equity for a deposit and that means stumping up another lump sum to start again with a fresh PCP deal. If the GFV looks shockingly high, and/or the monthly payments shockingly low, make sure you investigate the deal thoroughly.

Miles of smiles

Don’t under-declare your average yearly mileage in order to boost your GFV or reduce your monthly payments. Some mileage penalties are steep, and you could find yourself facing big excess mileage costs.