Finance Options

PCP (Personal Contract Purchase)

Personal Contract Purchase (PCP) is a popular vehicle finance option that allows you to drive a new or used vehicle without paying the full price upfront.

It works like a long-term rental with the option to buy at the end.

Unlike a standard loan, you don't pay off the entire value of the vehicle during the agreement.

How PCP Works

• Deposit
  Usually around 10% of the vehicle price or the VAT amount.
  Some dealers offer deposit contributions if you take their finance.
• Monthly Payments
  You pay for the vehicle's depreciation (difference between its initial price and its predicted value at the end of the term), not the full cost.
  Terms usually last 24-48 months.
  Payments are lower than Hire Purchase because you're not financing the entire vehicle value.
• Final 'Balloon' Payment
  At the end, you can:
  Pay the guaranteed minimum future value (GMFV) to own the vehicle.
  Return the vehicle (subject to mileage and condition).
  Trade it in for a new PCP deal.

Pros & Cons

• Pros
  Lower monthly payments then Hire Purchase.
  Flexibility at the end (buy,return or upgrade).
  Access to newer vehicles more easily.
• Cons
  You don't own the vehicle unless you pay the balloon payment.
  Mileage limits and wear-and-tear charges apply.
  Large final payment if you choose to buy.

HP (Hire Purchase)

Hire Purchase (HP) is a type of vehicle finance (and asset finance) that allows you to spread the cost of a vehicle over time.

You pay an initial deposit and then make fixed monthly instalments until the full amount (including interest) is paid.

Ownership transfers to you only after the final payment is made.

How HP Works

• Deposit
  Typically around 10% of the vehicle's price.
  A larger deposit reduces monthly payments.
• Monthly Payments
  Fixed payments over 2-5 years.
  Covers the full value of the vehicle plus interest.
  No mileage restrictions or wear-and-tear penalties.
• Ownership
  You become the legal owner after the last instalment (sometimes with a small 'Option to Purchase' fee).
  Until then, the finance company owns the vehicle, and you are the registered keeper.

Pros & Cons

• Pros
  Straightforward path to ownership, no balloon payment at the end.
  Fixed monthly payments, easy to budget.
  No mileage limits.
  Ideal for long-term ownership.
• Cons
  Higher monthly payments than PCP because you pay the full vehicle value.
  Less flexibility, you can't return the vehicle without settling the agreement.
  Interest costs, total cost is higher than paying upfront.