Is HP or PCP right for me?
It depends. An HP contract can be an affordable way to buy a car. You make your repayments each month and know that at the end of the deal you’ll own the car.
If you want to change your car every few years then PCP may be for you. Your repayments will be lower than an HP agreement for the car and at the end of the deal you can move to a new PCP deal and get a new car.
When would I choose a HP deal?
If you want to buy a car, then an HP agreement is likely to be a better option for you than PCP. With an HP agreement you’ll automatically own the car at the end of your deal. If you take out a PCP deal you will have the option to buy the car at the end of your deal but it’s likely to work out more expensive than if you had taken out an HP deal.
PCP deals also have a mileage limit so if you don’t want to be restricted by this an HP agreement is likely to be better for you.
Also, if you damage the car, with an HP agreement there is no charge for this as you are damaging your own car and not the car finance’s car.
When would I choose a PCP deal?
If you want a new car every few years, then a PCP deal is likely to suit you more than an HP deal.
You also usually need a smaller deposit and have lower monthly repayments on a PCP deal than with an HP deal.
With a PCP deal you don’t have to worry about the car depreciating in value as you simply hand it back to the car finance firm at the end of your deal.