Personal Contract Plans, or PCPs are offered by most car dealerships and can sound very attractive providing the deposit is affordable & monthly repayments low – What could possibly go wrong?

Victoria Harrison, Blues and Twos Chief Executive said “Recent press articles are expanding on the details that many of us didn’t have chance to read or to realise there can be a number of pitfalls to be aware of when entering into a PCP agreement – most of which can be avoided completely by taking out a car loan with your local credit union”

Here are some reasons why you should talk to your Blues and Twos team rather than enter into a PCP.


A PCP is a kind of hire-purchase agreement, where you do not actually own the car until you make the final balloon payment. If you want to change cars or if you encounter difficulties during the term of the contract, you cannot sell the car without the agreement of the finance house/dealer.

With a Blues and Twos, credit union loan the car is you are from day one.


PCP monthly payments are fixed over the term of the agreement, you cannot pay extra each month to finish up early and you will be charged a fee if you need to restructure the agreement in any way.

With the credit union, there are no penalties for repaying your loan early, so you can pay more each month if you wish. Also, because we are locally run for the benefit of our common bond (you, your colleagues and your family), it is often possible to renegotiate the terms of the loan should your circumstances change and you run into difficulties.

Balloon Payments

A PCP is broken into three parts – deposit, fixed monthly payments and a large final payment “balloon payment”. This can be anything up to 50% of the value of the car. You will not own the car outright until you pay off that final amount.

With a credit union loan, there are no nasty surprises left at the end of the term and your repayments will stay the same throughout.


As part of a PCP agreement, there is usually a restriction on how much mileage you put on the car. Going over the agreed maximum mileage can affect the final value of the car and end up costing you more money.

The credit union has no interest in how much driving you do in your car, we just want you to be safe and drive carefully


PCP providers often insist you have the car serviced on a strict schedule by someone in the official dealer network. If you come to the end of your term and you have either missed a scheduled service or had it done anywhere other than one of their specified locations it could end up costing you a fortune.

The credit union just hopes you drive safely and looks after your car so you can get the most value from it.

Negative equity

When you buy a car, it immediately begins to lose its value to depreciation, very quickly at first, but it does slow down. This is normal and with a credit union loan, it is not an issue, because as depreciation slows down your payments catch up and it all balances out.

With a PCP, especially if you have paid a low deposit, you may never actually catch up with the cars depreciation. This really only becomes a problem if you need to change cars or if your financial situation changes and you need it exit the PCP early, because even selling the car won’t be enough to cover what you owe the dealer.


PCPs are attractive because they consist of a relatively low deposit and low fixed repayments, which makes them seem very reasonable and manageable at the outset. However, you need to look at the total cost over the term of the PCP, bearing in mind the car is not even yours until the final payment is made.

Community based

Credit unions are made up of people like you, who share a common bond through their work. Savings in the credit union contribute to the loan fund. We encourage regular saving and to borrow only what you need. Find out more about how your credit union works

Not for Profit

Credit Unions are run only for the benefit of their members and not to profit from their needs.  Unlike commercial lenders, where profits go to third party investors, any surplus income generated by Blues and Twos is returned to members as a dividend or invested in improving and expanding the service we provide you.

Help from a friendly team

Not only do we offer fair and reasonable rates on personal finance, but also we offer online or face-to-face assistance with your application. If you are planning to buy a new or used car, do not be sucked into the first shiny looking PCP offered by the dealer ship, come and talk to us today.

V Harrison, CEO, Blues and Twos Credit Union 

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