What is the difference between pcp and hire purchase

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Sam Bisby 31 Jan Sign up for our newsletter to receive our latest news and offers How will we use your email? Follow us and like us:. Useful links: Home. Contact Us. Customer Relations. Bear in mind, however, that if you do want to own the car, you're likely to pay less with Hire Purchase - assuming like-for-like contract terms - as less interest is charged because you're paying off the balance faster. If you're running on a particularly tight monthly budget, PCP finance makes the prospect of running a car a much more manageable one, with much cheaper short-term costs meaning you can park the car of your choice on your driveway without necessarily breaking the bank.

Hire Purchase, meanwhile, is a more affordable way to buy a car outright - with no massive final payment to worry about. It allows you to go about the process in a similar way - spreading the cost of a car over a longer period potentially - and leaving you with the keys once the payments have been made, since you become the owner at this stage.

While the issue of interest will have an effect on the overall cost of your contract - with interest charges racking up faster with PCP as you're paying off the borrowing more slowly - the choice between PCP and HP will come down to personal preference in many scenarios. Those who absolutely want to own the car are better off going for Hire Purchase, while those who love the idea of getting a desirable model for low monthly payments and then changing every few years will find it much easier to do that with PCP.

See the section below for all the ins and outs. Hire Purchase and PCP finance have many similarities, but a number of important differences. Keep reading for details of the pros and cons of both options:.