What is the difference between PCP and hire purchase?

PCP usually has lower monthly payments because a large optional final amount is left until the end, while hire purchase generally spreads more of the car’s price across the monthly payments and leads to ownership after completion.

In relation to “What is the difference between PCP and hire purchase?”, the agreement is the controlling document: headline monthly payments can hide a deposit, final payment, mileage limit or settlement position that changes the real cost.

For “What is the difference between PCP and hire purchase?”, read the agreement for the cash price, deposit, total amount payable, optional final payment, mileage allowance and return conditions. The monthly payment alone does not show the whole cost.

For “What is the difference between PCP and hire purchase?”, with hire purchase, the finance company normally owns the vehicle until the agreement is completed. Check the agreement before selling, modifying or exporting the car.

For “What is the difference between PCP and hire purchase?”, compare ownership outcome as well as monthly cost. A cheap-looking monthly figure can represent a very different end position depending on whether there is a final payment or no ownership option.

For “What is the difference between PCP and hire purchase?”, this answer is written for a Northern Ireland user, but some vehicle-registration, consumer-credit and insurance functions operate on a UK-wide basis. The attached sources — MoneyHelper - Personal Contract Purchase (PCP), MoneyHelper - Buying a car with Hire Purchase, and nidirect - Contact Consumerline — are therefore deliberately mixed where the responsible authority is UK-wide. That is more accurate than forcing every point into an NI-only source.

Practical next step for “What is the difference between PCP and hire purchase?”: open the finance agreement and find the figures or clause relevant to this question. If you are changing or ending the agreement, request the current position directly from the finance provider before promising the car to anyone else.