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Finance can be confusing, but we don’t want it to be! Whether you’re considering finance for your next car purchase or you just want to get clued up, read our guide to HP and PCP Finance below.

Before we look at the two different finance options, PCP stands for Personal Contract Purchase and HP stands for Hire Purchase. 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 the right 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 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 or you want to find a used car for sale in Liverpool, visit the team at Wavertree Car Centre.