For many years, British motorists across the country fulfilled the dream of buying a new car thanks to a highly advantageous financing method: PCP.
A PCP agreement is a type of car finance in the UK that allows you to drive a new vehicle without paying the full cost upfront. You make fixed monthly payments, and at the end of the agreement, you can choose between returning the vehicle, buying it outright by paying a final “balloon” payment, or trading it in for a different model.
The success of the model has been so great that it’s estimated that around 80–90% of new and used cars financed in the UK are financed through PCP. It’s the dominant choice for private buyers, and its use has surged over the past decade.
In 2009, just under half of private new car sales were financed. By 2016, that figure had jumped to 86.6%, largely driven by PCP.
However, this love affair started to unravel in 2021, when it came to light that millions of drivers had been sold PCP deals without fully understanding what they were signing up for, particularly when it came to undisclosed commissions that may have influenced the interest rates they were offered.
At the centre of it all is the discretionary commission model, which allowed dealerships to tweak the customer’s interest rate and earn more commission by raising it. None of this had to be disclosed to the buyer. This lack of transparency may have cost drivers hundreds, if not thousands, of pounds extra over the course of their agreement.
The Financial Conduct Authority (FCA) launched a formal investigation and opened the door to a potential wave of PCP claims, much like what followed the PPI scandal. So now, five years since this all came to light, and with the Supreme Court expected to deliver its ruling on the matter in July 2025, there is one question on everyone’s mind:
Is PCP finance finished, or is it still worth considering?
The Verdict
The answer is: Not quite finished, but definitely not untouchable anymore.
PCP hasn’t been banned. It’s widely offered, and for some people, it might still make sense. If you want lower monthly payments, like the idea of changing vehicles every few years, and don’t care about ownership, it can work. But here’s the catch: you need to understand exactly what you’re signing.
What’s changed is trust. The scandal pulled the curtain back on how these deals were structured and how many buyers were pushed into them without full transparency. That’s not a small detail. It’s the kind of thing that undermines the whole product.
In fact, the Financial Conduct Authority banned discretionary commission arrangements (DCAs) back in 2021. That practice is now officially out of bounds, but the damage it caused still echoes today.
So no, PCP finance isn’t dead. But it’s under scrutiny, and rightly so. If you’re considering it in 2025, be more cautious than ever. Read the fine print. Ask the awkward questions.
And if you’ve already had a PCP and think something wasn’t right, it might be worth looking into. You’re not imagining it. A lot of people were misled.
The Advantages of PCP in 2025
For all the justified criticism, PCP still has its strengths and, for the right type of buyer, it can be a useful option.
The most obvious draw is lower monthly payments. Because you’re not paying off the full value of the car, just the depreciation, the instalments tend to be more manageable than other types of finance, like Hire Purchase.
There’s also flexibility at the end of the term. If your circumstances change, you’re not locked into ownership. You can hand the car back and walk away. Or, if you’ve looked after it and the value holds up, you might even have some equity to roll into your next deal.
For drivers who like changing cars regularly, and who aren’t particularly fussed about owning the vehicle outright, PCP can still tick a lot of boxes. The key difference now is that buyers need to approach it with their eyes open. The era of blind trust is over.
The Drawbacks You Can’t Ignore
While PCP can offer flexibility and lower monthly payments, it’s far from perfect, and the recent scandal only highlighted some of its long-standing weaknesses.
The biggest issue? You don’t actually own the car unless you pay the large final balloon payment. That means after years of monthly payments, you could still walk away with nothing. And if you do want to keep the vehicle, that lump sum can come as a nasty surprise, especially if it wasn’t clearly explained at the start.
There are also tight mileage limits and condition clauses. Go over the agreed mileage or return the car with even minor wear and tear, and you’ll likely face extra charges. These terms are often buried in the paperwork or brushed over during the sales pitch.
Then there’s the elephant in the room: trust. The whole model was built around a commission system that rewarded salespeople for bumping up your interest rate. Even though discretionary commissions were banned in 2021, the damage to consumer confidence is real.
Finally, you’re tied in. Exiting a PCP early isn’t easy or cheap. Life changes, but if you need to end your agreement before the term is up, it can cost you dearly.
In short, PCP still works for some people. But it’s no longer the obvious, go-to option it once was. It needs careful thought
So, Should You Still Choose PCP?
Only if you understand exactly what you’re getting into.
The days of PCP being sold as a no-brainer are behind us. The flexibility and lower payments are there, but so are the risks, and now, the history. The finance model isn’t broken, but the way it was sold to millions of drivers clearly was. That matters.
If you’re considering PCP in 2025, go in clear-headed. Ask questions. Push back. Read everything. And don’t let anyone rush you into signing anything that feels vague or overly polished.
