Along with car leasing, personal contract purchase (PCP) agreements are a popular form of financing a new car. The main difference between a lease and PCP is that you won’t have to pay a balloon payment at the end of your contract. A PCP on the other hand, gives you the option to pay a large amount of money to keep your vehicle. This is usually equal to the minimum guaranteed future value of the vehicle. Research has shown the vast majority of PCP customers choose not to pay the balloon payment. In these cases, they have essentially leased the car – but often while incurring higher monthly payments and deposits. You can read more about how leasing compares to other finance types in our guide: 'Leasing vs PCP vs HP'