Car finance explained

With so many options to choose from, we’re here to help you find the best way to fund your car.

Personal Contract Purchase (PCP)

A personal contract purchase (PCP) deal is like hiring a car for a long term, but with the option to buy at the end. Generally the higher the deposit you pay, the lower the monthly payments. You pay off the depreciation of the car, not its full value.

At the end of the agreement, if you decide you want to keep the car, you make a 'balloon' payment. This covers the remaining cost of the vehicle. If you don't want to keep the car, you can give it back, or start a new PCP deal and get a new car.

Personal Contract Purchase Information

Hire Purchase (HP)

Hire purchase (HP) is an arrangement where you hire a car from a finance company until you've fully paid for it. You tend to pay an initial deposit and monthly instalments. Generally the higher deposit, the lower the monthly payment. And after the final payment is made, it's yours to keep!

Hire Purchase Information

Personal Loan

A personal (or unsecured) loan allows you to borrow a lump sum over a fixed term.

The loan isn't secured against anything. That means if you use a personal loan to pay for your car, you'll own it outright from the day the money's transferred to the dealer. As such, you can sell the vehicle at any time, without needing to settle up with the finance company first.

Personal Loan Information

Lease (PCH)

A personal contract hire (PCH) deal or lease is effectively long-term hire of a car. However, unlike personal contract purchase (PCP), there's no option to buy at the end of the term.

You lease the car over the agreed contract period, and pay an initial deposit - normally the equivalent of three, six, nine, or 12 months worth of payments. Monthly payments tend to be fairly low, given that you won't own the car afterwards. Then you return the car when the contract expires - it couldn’t be simpler!

Personal Contract Hire Information
  Hire purchase (HP) Personal contract purchase (PCP) Personal loan Lease
You own the car from point of purchase
Car is yours at the end of the agreement
Requires initial deposit
Usually requires deposit
Usually requires deposit
Fixed monthly payments
Excess mileage charges
If you've exceeded contract mileage on return
If you've exceeded contract mileage on return
Secured against the car