Question 1

What is the difference between HP and PCP?

Accepted Answer

With Hire Purchase you pay off the full value of the car in monthly instalments and own it at the end. With PCP, monthly payments are lower because they only cover the car's depreciation, but a large optional balloon payment is due at the end if you want to keep the car.

Question 2

What is a balloon payment?

Accepted Answer

A balloon payment, also called the Guaranteed Minimum Future Value, is a large final lump sum on a PCP deal. You pay it only if you want to own the car outright at the end of the agreement.

Question 3

Is HP or PCP cheaper?

Accepted Answer

PCP usually has lower monthly payments, but HP is often cheaper overall if you intend to keep the car, because you are not deferring cost into a balloon payment that still accrues interest.

HP vs PCP — which is right for you?

Frequently asked questions