Should I Choose HP or PCP Car Finance?

If you have decided to purchase your next motor using car finance, the two most popular options are PCP and HP. The two are similar in that both payment methods will involve a deposit followed by monthly repayments.


Hire Purchase Finance

Hire purchase (HP) car finance is the simplest type of agreement to get your head around and is available for the majority of the used cars for sale here at Hilton Garage.

With this type of agreement, you will typically have to put down a deposit on the vehicle you wish to finance, then the amount left to pay will be divided by the contract length to give you the sum of your regular repayments. Once all of your payments have been made, the vehicle will be legally yours.


Personal Contract Purchase Finance

The main difference between hire purchase and personal contract purchase (PCP) finance is that you will not necessarily keep the vehicle at the end of the agreement. When you sign up for a PCP deal, the car dealer will estimate how much your vehicle will be worth at the end of your contract term, this is known as the guaranteed future value.

Your monthly repayments will cover the difference between the current cost of the vehicle and its guaranteed future value, and when these payments have all been made, you will have the option to either purchase the vehicle, or simply return it.


HP or PCP Car Finance?

HP finance is better for those who want to keep the vehicle at the end of their agreement, and don’t want the bother of having to keep an eye on mileage, as you will not be limited like you would with PCP. PCP finance offers more flexibility and as the monthly payments are lower than they would be with HP, you may be able to afford a better, more expensive car.


Apply for car finance with Hilton Garage online today!