What is Personal Contract Purchase (PCP)?
Personal Contract Purchase (PCP) is a financing option that enables you to spread the cost over a fixed term. When choosing PCP, you will need to pay a deposit followed by a series of monthly repayments. At the end of the agreement, you have three options: pay a final balloon payment and own the car outright, return the car to the dealership, or use the car as a part-exchange for a new PCP agreement.

How does PCP actually work?​

When you opt for PCP, you choose the car you want to purchase and agree on the deposit, monthly repayment amount, and the length of contract with the dealership. The monthly payments cover the car's depreciation in value during the contract term, plus any interest charged on the amount you borrow. At the end of the agreed period, the car will be worth a certain amount, known as the Guaranteed Future Value (GFV). You can choose to either pay the GFV to own the car outright or return the car to the dealership and walk away.

What are the advantages of PCP?

One of the most significant benefits of PCP is the lower monthly payment compared to other finance options. In addition, you have the flexibility to choose the car you want to purchase and the contract term. PCP also enables you to drive a new car every few years without worrying about the hassle of selling it.

What should you consider when option for a PCP?

When opting for PCP, you need to consider factors such as the deposit amount, monthly payments, contract term, and mileage limit. Ensure that you can afford the monthly repayments, and that the mileage limit suits your driving habits, as any additional mileage above the agreed amount will incur extra costs.

Can I settle my PCP agreement early?

Yes. You can settle your PCP agreement early by paying off the outstanding finance amount, which is the difference between the amount borrowed and the current value of the car. However, this amount may be higher than the GFV, and you may need to pay an early settlement fee.

What is Hire Purchase (HP)?
Hire Purchase is a popular form of finance for buying a car. It is a simple and straightforward agreement between a buyer and the lender, where you pay fixed monthly instalments over a set period of time. With HP, the car is, essentially, on hire and remains the property of the lender until the final payment is made. Once all the payments are complete, you become the legal owner of the vehicle.

How does HP actually work?​

The HP finance option works in three stages. First, pay an initial deposit, which is usually around 10% of the car's total value. After this, the remaining balance plus interest is split into equal monthly payments over an agreed term, usually between 12 and 60 months. Once all the payments have been made, including the interest charges, you will be able to take ownership of the car.

What are the advantages of HP?

One of the main benefits of HP finance is that it is an affordable way to purchase a new car. The fixed monthly payments make budgeting easier, and the interest rates are often very competitive. HP is also an excellent option should you wish to own outright but cannot afford to pay the full price upfront.

What should you consider when option for a HP?

When considering HP finance, there are a few things to bear in mind. First, you should think about the amount of deposit you want to put down. A larger deposit will reduce the monthly payments, while a smaller deposit will increase them. Second, you should consider the length of the agreement. A longer term will again result in smaller monthly payments, but you will pay more interest in the long run. Third, you should check the interest rates and ensure that they are competitive. Finally, make sure that you can afford the monthly payments throughout the term of the agreement.

Can I settle my HP agreement early?

Absolutely. However, there may be fees involved, and the amount you owe will depend on the remaining balance and how much you have already paid. If you are considering settling your HP agreement early, we recommend that you speak to one of our finance specialists asap, and they will be able to advise you on the best course of action.