In finance, PCP most commonly stands for "Personal Contract Purchase." It is a type of car financing arrangement where you borrow money to buy a car and pay it back in monthly installments over an agreed period. Unlike traditional hire purchase, with PCP you do not pay off the full value of the car during the contract. Instead, you pay the difference between the car's original price and its forecasted value at the end of the agreement, known as the Guaranteed Minimum Future Value (GMFV) or balloon payment. At the end of the contract, you have options to either pay the final balloon payment to own the car, return the car, or trade it in for another vehicle. PCP is designed to make car ownership more affordable by lowering monthly payments and providing flexibility at the contract's end.