What is personal contract purchase (PCP)?

Personal contract purchase (PCP) is a type of vehicle finance. Similar to HP finance, PCP finance usually sees you pay a portion of the total amount upfront as a deposit, then a series of monthly payments, often over a two-to-four-year period. At the end of the agreement, you can pay or refinance the optional 'balloon' payment to become the car's owner. Alternatively, you can hand the car back, or use it as part exchange, rolling any positive or negative equity into another finance agreement.