A personal contract purchase (PCP) is the most popular way to finance a car. It is often seen as a way to buy a car over three or five years, but most people do not go any further to buy the car. Here`s a look at PCP, including how it works, what needs to be taken into account, what to do if you have to terminate the contract prematurely, and what to do if you have money problems. Negotiate a down payment and staggered payments with the buyer. The down payment can be a considerable amount, for example. B half or a third of the price of the vehicle, or it could be one or more of the staggered payments. The seller should make sure that he sees proof of the buyer`s address with the identification. You should make copies to ensure that the buyer does not “disappear” after the first payment. This retail rate contract is the legal document that explains the payment plan. It includes the sale price of the car, the negotiated down payment and the staggered payments. With the temperature plan catching up, there will be an end date scheduled for full payment of the car.

If the buyer has not paid the balance on time, there may be late fees and higher interest rates. It is not exactly the same as a loan contract, but rather like a Layaway. Another important function of the vehicle purchase contract is its use with respect to the sale bill of the vehicle. As mentioned above, the contract will reveal the full terms of the sale by the previous owner to the current one: the names (seller/buyer) in the transaction, the information of the car, the amount for which it was purchased, the rights and responsibilities transferred as a result of the sale contract. If you want to keep the car, you need a final payment, often called balloon payment. This is based on what the dealer thinks the car is worth now – its guaranteed minimum term value (GMFV). This can range from a few hundred to a few thousand pounds, but will be much more than normal monthly payments. If you haven`t saved that money, you may need to borrow another loan to pay for it. For an incentive, merchants usually offer free items or services to the buyer. Be sure to make a list of all these offers and make sure they are all included in the sales contract. These free items should include a zero amount in the agreement.

If not, co-run the amount, and write zero ($0) next to it, and subtract that amount from the total purchase. Or better yet, ask the seller to reprint the contract.