Both HP and PCP allow you to pay for your vehicle in monthly payments over an agreed period, with a fixed rate of interest. The key difference is what happens at the end of each contract.
With a HP contract, you’ll own the vehicle after making the final payment.
At the end of a PCP contract, you can either hand the vehicle back to the lender, part exchange it for a new one, or pay the optional final repayment (including any purchase fee) to keep the vehicle. New finance agreements are subject to status and affordability checks. If you hand the vehicle back at the end of a PCP agreement, there may be extra charges if you go over the agreed annual mileage or if the vehicle has damage over fair wear and tear.
What’s the difference between Hire Purchase (HP) and Personal Contract Purchase (PCP)?
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