HP or PCP?

When looking for your next car, the finance world can seem like a minefield. Here, we will tell you the difference between PCP and HP and which one might be the right option for you.

Before we dive into the two different finance options, PCP stands for Personal Contract Purchase and HP stands for Hire Purchase. We also offer Bad credit finance and guaranteed car finance. You can read more about them on our website but remember, finance isn’t right for everyone and we recommend speaking with one of our specialists to see if it is a good fit for you. So, what are the differences between PCP and HP?


Hire Purchase is the most common way to purchase a car. You typically pay a deposit at the start of the agreement and a series of monthly payments lasting between 12 and 60 months. At the end of the agreement, there will be an option to purchase fee. Once all the payments have been made, the car then belongs to you as opposed to the finance company, who you were essentially hiring it from.


Personal Contract Purchase works slightly differently to Hire Purchase. Your payments are spread monthly over two to four years and at the end of the agreement, you will normally be faced with three different options.

1.     Hand the car back to the dealership or finance company

2.     Part exchange the vehicle for a new finance deal and car

3.     Buy the car outright by paying a balloon payment which is calculated based on the guaranteed future value of the car, calculated at the time of the agreement being taken out.

With PCP, you will need to commit to a figure of annual mileage which protects the value of the car. This type of finance is becoming increasingly popular.

If you want to find out more about financing a used car in Kent, get in touch with the team at Kent Car Buyers.