Car Comparison

Comparing Hire Purchase and Personal Contract Purchase

Understand the key differences between PCP and HP finance

What are HP and PCP?

Personal Contract Purchase (PCP) and Hire Purchase (HP) are both finance agreements that allow you to pay monthly for your car.

Although they have many similarities there are also a lot of differences between the two finance methods.

If you're trying to decide between the two, you're in the right place. Below is a table that highlights the advantages and disadvantages of both types of finance to help you make an informed decision on which is best for you.

What's the difference between HP and PCP?

HP is a great option if you would like to own the car outright and have the flexibility to drive as many miles as you like without worrying about wear and tear. You may pay more per month than in a PCP agreement but you're paying towards owning the car at the end of your agreement.

PCP will suit you if you don’t want to be tied down to owning the car outright. This finance agreement gives you the freedom to keep your options open at the end of the term. However, you'll have the option to buy the car for a set price, as set out at the start of your agreement.

You'll also have the option to give the car back and, providing you have stayed within fair wear and tear and mileage limits, you can walk away without paying any other fees. Last of all, you can trade the car in for another, using its value towards a new PCP agreement.

PCP and HP pros and cons

HP Pros

HP Cons

You're paying towards owning the
car at the end of your agreement

You'll be paying for the total cost of the
car over the course of your agreement

You don't need to worry about annual
mileage restrictions or wear and tear on the car

You'll only own the car once you have
paid the final agreed instalment

You can contribute a higher deposit
to lower the monthly repayments

You're likely to pay more back
each month than on a PCP plan

PCP Pros

PCP Cons

You have the freedom to return
the car at the end of the agreement

You'll need to stick to agreed wear and
tear limits or face financial charges

At the end of the agreement, you have the option
to purchase the car or take out a new PCP deal

You'll need to stick to an agreed annual
mileage or risk being charged extra

You may only have to pay a small deposit
to start your PCP plan, unlike on a HP plan

You won't own the car at the end of the deal
unless you pay the optional final payment


Finance your next used car your way

If you feel confident that you know what you want from a car finance agreement, then you can go right ahead and arrange your finance online with CarStore. It's simple, easy and quick to do.

However, we know that you may want someone to help you understand everything that's involved with finance. Our personal advisors will be happy to listen to your individual requirements and present you with all the information using plain, jargon-free language. 

Talk to us online, over the phone or contact a CarStore Centre with any questions you may have.