4 differences between PCP car finance and Hire purchase

With any kind of car finance Manchester agreement, you’re borrowing money to buy the car from a finance company, whether that’s with a dealer or a manufacturer. Car finance is an easy way to obtain a vehicle when you don’t have the funds to pay for it yourself. The main two types of car finance are Hire Purchase (HP) and Personal Contract Plan (PCP). In this guide, we will show the main differences between the two, so you can decide which is best for you.

The Payments

One of the biggest differences between HP and PCP is that with HP, you won’t pay a “balloon payment” (final payment). With hire purchase, you’ll pay back the entire value of the car in your deposits and monthly payments. With PCP, you pay a deposit, monthly payment, and a balloon payment.

The Cost

With PCP, you’ll usually have a cheaper deposit and monthly payments because some of the car’s value is deferred into the final payment. If you’re looking for cheaper monthly payments, PCP will be a better option.

Keeping the car

At the end of your HP financing agreement, you’ll own the car. At the end of the PCP agreement, you’ll only own the car if you choose to pay the balloon payment. If you like to change up your car often, PCP will be the better option because you can choose to give the car back and walk away at the end of your finance term or trade it in for a newer model. If you’d prefer to keep it at the end of the agreement, you should choose HP.

Mileage limit and damage charges

Most PCP car finance agreements Manchester have mileage limits and charges for wear and tear. This means that you may be charged a fee at the end of the agreement if you go over the mileage limit or damaged the car. You won’t have this with HP because you own the car at the end of the agreement.

What agreement should I choose?

Choose PCP if:

• You like to change your car often.
• You want lower monthly payments.
• You’re not worried about large payments at the end of the agreement.

Choose HP if:

• You want to own the car at the end of the agreement.
• You want to buy an older car.
• You don’t want to pay a balloon payment , wear and tear or mileage charges.

Mis Sold Car Finance Claims - PCP Claimsline

If you were mis sold PCP car finance or HP car finance, you may be entitled to claim compensation. It is estimated that hundreds of thousands of motorists might have been mis-sold motor finance Manchester packages, costing consumers up to £300m a year. If you've been mis-sold car finance, our team of experts can help you get your money back. Contact us using the details below to start your claim.

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