If you are looking to finance your next vehicle and would like more info on the options available please do not hesitate to contact us, we are always here to help!

At P McKenna Motors we understand the importance of treating our customers fairly and have continuously implemented this strategy into every customer interaction we have ever had.

Part of that fair treatment is helping You the customer understand all the finance options that are available to you and by working hard to maintain relationships with various motor financing companies so that we can offer you the best finance options for your budget & needs.

You can also have a look at the following informative videos provided by V12 Finance – one of our financing partners.

It is not every day you change your car and we understand this can be an unknown process for most with a lot of jargon thrown in along the way so let us keep you informed by providing explanations of some of the terms you will come across in the process;


Financial terms

PCP Personal Contract Purchase

Personal Contract Purchase (PCP) is a form of hire purchase agreement, which includes a voluntary “balloon” payment at the end. This final amount represents the future residual value of the car, based on the age of the vehicle at the end of the agreement and the forecast mileage.

Monthly repayments are generally lower under a PCP agreement than a comparable HP agreement because of this deferred amount. With this type of agreement, payment of the future value of the car is optional. it must be paid if you wish to own the car outright, but you could simply decide to hand the keys back and start another agreement for a different vehicle.

Balloon Payment

A balloon payment is a large final payment of the loan that is much bigger than the regular payments. It is usually paid at the end of the loan period, after paying only interest or a small portion of the principal before.

In Lease Purchase this is non optional and the Balloon payment must be made. In PCP you have options and one of them is to pay the balloon payment and own the vehicle.

Flat Rate

This is the base interest rate charged on the finance agreement. The Flat rate interest does not include any other charges for example if there was a fee for setting up the finance. For comparisons the APR is a more accurate method.

Hire Purchase

When taking out an HP agreement, you pay an initial deposit, then a fixed monthly repayment over a set number of months. The Term can be from 24-60months depending on the Age & miles of the vehicle.

APR Annual percentage rate

APR stands for annual percentage rate. It is the amount of interest you pay annually on any money you borrow. It includes the standard fees and charges of a credit offer.

For example, if you borrow £1000 with an APR of 10%, you will pay back £1100 in total.

GFV Guaranteed Future Value

GFV stands for guaranteed future value. It is the term used in car finance for a vehicle’s residual value at the end of a PCP (personal contract purchase) agreement. It is the amount you have to pay if you want to buy the car outright after the contract ends.

For example, if you buy a car worth £20,000 on a PCP deal with a GFV of £10,000, you will pay monthly instalments based on the difference (£10,000) and have the option to pay the GFV (£10,000) at the end of the contract to own the car.

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