Spotting a bad PCP deal before you sign

Why PCP reads as 'cheap'

PCP lets you pay only for the depreciation of the car over the contract term, with a balloon payment at the end to cover the rest. That makes the monthly number small and the 'car you can afford' look bigger. It is not inherently a bad product — but it is specifically designed to make comparing deals difficult.

The three numbers that matter

Not the monthly payment. These three.

• APR: the annual interest rate. Anything over 10% on a used car in 2026 is high. Over 15% is predatory. Main-dealer manufacturer-backed PCP sits around 6–9%.
• Total amount payable: add the deposit, all monthly payments, and the optional-final-payment together. Compare that to the cash price. Anything more than 115% of cash price is expensive finance.
• GFV (guaranteed future value) / optional final payment: the balloon you'd pay to keep the car. If the GFV is way below what a comparable car sells for at that age, the dealer has priced the deal for handover-back, not keep.

The setup that costs you

Dealer quotes a £189/month PCP on a £22,000 car. Looks fine. Then: deposit £3,500, 48 monthly payments of £189, final optional £10,500. Total = £23,072 cash equivalent. You paid £1,072 for the finance — probably a 6% APR deal. That's reasonable. Now run the same maths on a £269/month PCP with £3,500 deposit and a £9,000 GFV over 48 months: total = £25,412. You paid £3,412 for the finance on the same £22,000 car. That's the trap.

When PCP is actually right

You plan to change cars every three or four years. You want predictable monthly budget and factory warranty coverage throughout ownership. You're under the mileage cap. In those three cases, PCP is genuinely the cheapest way to use a car.