HP or PCP? Whats the difference...

If you’re looking to buy a car on finance, two of the most popular options that you will be presented with are Personal Contract Purchase (PCP) and Hire Purchase (HP) Finance. In this article we explore key differences between PCP and HP finance, as well as the pros and cons of each to help you decide which one is right for you.

Hire Purchase (HP)

Hire Purchase (HP) Car Finance
Hire purchase (HP) - including Conditional Sale (CS) - car finance can be a great way to spread the cost of your car across monthly payments after paying an initial deposit.

Hire Purchase (HP) is a type of car finance that allows you to spread the cost of purchasing a vehicle across a contracted period.

You’ll pay a deposit, and then cover the remaining cost of the car with your fixed monthly repayments until your car finance contract comes to an end.

There is a small ‘option to purchase’ fee that’s included in your final payment, which you’ll be made aware of when you sign your HP car finance agreement.

You might choose a finance car offer if you don’t want to pay the upfront cash price and spreading the cost seems a better alternative.

How does HP car finance work?

HP car finance gives you the ability to make monthly payments towards the cost of your car. This can be more manageable than buying a car outright, and you can tailor your HP finance agreement to suit your needs by adjusting your deposit or the length of your contract.

Quote Me Now

Personal Contract Purchase (PCP)

You can use Personal Contract Purchase car finance to spread the cost of a new car across monthly payments, with one final 'balloon payment' at the end of your PCP contract. What is PCP car finance? Personal Contract Purchase (PCP) car finance is a way of spreading the cost of your next car. This type of car finance allows you to make equal monthly payments across an agreed term, with a final ‘balloon payment’ at the end of the term to take ownership of the vehicle.

Unlike other types of car finance, PCP deals consider the cost of the depreciation of your car across the length of your contract. This amount is based on how much your vehicle is predicted to be worth at the end of your contract – also known as the Residual Value (RV) or Guaranteed Minimal Future Value (GMFV).

PCP car deals: are they right for me?

Fixed monthly payments
You can hand the car back at the end of your contract
No depreciation worries if you plan to hand back the car
You’ll be made aware of the exact amount of the optional balloon payment when you sign your contract

Things to consider

You’ll need to pay an initial deposit
You’ll usually need fully comprehensive car insurance
Excess mileage charges apply if you go over your mileage allowance
Large balloon payment if you want to keep the car

Quote Me Now

Your Finance

Fast and easy finance... With a smile!

Quote Me Now

Your Car

Choose from hundreds of approved used cars

Find Your Dream Car

Concierge Motor Finance is a registered trading name of European Vehicle Contracts Limited, authorised and regulated by the Financial Conduct Authority, FRN 649225. Eurodrive Motor Finance is acting as a licenced credit broker and not a lender. Eurodrive can introduce customers to a limited number of finance partners/lenders based on your credit rating. By introducing your details, we receive a commission from our finance partners/lenders. This is a fixed percentage or figure and may vary by lender/partner. However, this will never impact the rate or acceptance you are provided. Further information can be supplied on request. We will not charge you a fee for our services.