Buying a car on PCP? Avoid ‘rip-off’ optional extras

Motorists are advised to avoid expensive optional extras when buying a car on a Personal Contract Purchase (PCP) contract to avoid 'rip-off' price hikes.

Avoid optional extras on PCP

Car buyers are being warned to avoid ‘rip-off’ optional extras when purchasing a car on a PCP deal.

Buying a car on Personal Contract Purchase (PCP) means that you’re financing the difference between the car’s value NOW and the forecasted residual value at the END of the contract.

There’s a deposit to pay at the start, followed by a succession of fixed monthly payments, then an optional ‘balloon’ payment at the end.

Around 90 percent of privately-bought new cars are now financed, and PCP is popular because the monthly payments tend to be cheaper than traditional finance packages. Consumers also have the option to upgrade to a newer model at the end of the deal.

But analysts at have calculated that adding optional extras to cars financed on PCP adds a disproportionate amount to the monthly payments.

Most new car finance schemes charge the full original cost of any options split into instalments, ignoring the fact that a car with thousands of pounds’ worth of extras would be worth more at the end of the contract – which should reduce how much those extras add to the monthly fee.

Options at a car dealer

It means that adding extras like a panoramic roof, premium sound system, winter pack or suite of safety features might cost significantly more to finance than a car with a higher trim level offering the kit as standard.

According to, on a typical PCP deal for a Ford Fiesta 1.0-litre 100 Titanium, every £1 per month covers £72.94 of the list price. Meanwhile, the same £1 increment equates to £46.91 worth of options. This is based on a 48-month contract, with zero deposit and 9,000 miles per annum.

The same is true of a Volkswagen Golf TSI Match – £1 per month covers £69.56 of the value, with each additional £1 covering just £43.63 of extras. In another example, showed that adding £22,465 worth of extras to a Jaguar F-Pace R-Sport would add an additional £505.55 per month to the £504.33 monthly fee for the car.

Don’t load a basic car with expensive features

Austin Collins, managing director of, said: “Although PCP finance has made new cars more affordable to ordinary people than ever before, there are still aspects of personal contract purchase which do not always represent the best value buyers could get for their money and option costs are one of them.

“Buyers can protect themselves though, by choosing a car with the desired equipment already installed rather than loading a basic model with expensive features.”

Mini in a showroom

Mini, for example, recognises that certain options or option packs make the car more valuable at the end of the contract. While the Navigation Plus and Comfort packs should add £2,900 to the cost of a five-door Mini Cooper Sport, it only adds £2,148.26 to the total cost of a PCP deal.

In monthly terms, a customer pays an extra £51.75 a month rather than an additional £71.

The only true way to avoid inflated PCP payments is to buy a used car loaded with your desired options. Austin Collins said: “Used cars represent the very best value for money when it comes to getting a car with plenty of standard and optional kit fitted, because they have already lost the bulk of their original value and that is reflected in the purchase cost – and PCP finance monthly payments – for the car.”

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Gavin Braithwaite-Smith
Writer with a penchant for #FrenchTat. Also doing a passable impression of Cousin Eddie in an Italian-German beige motorhome.


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