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HP vs PCP: Which Is Right for You?

Hire Purchase (HP) and Personal Contract Purchase (PCP) are the two most common car finance options in the UK, and they suit different priorities. This guide compares how they work so you can decide which fits your plans.

Finance types23 June 2026

How HP works

With Hire Purchase you pay a deposit and then fixed monthly payments until the full value of the car, plus interest, is repaid. Once the final payment and any small option-to-purchase fee are made, you own the car. There are usually no mileage limits.

How PCP works

With Personal Contract Purchase, part of the car's value is deferred to an optional final payment at the end. That usually makes the monthly payments lower, but you only own the car if you make that final payment. PCP agreements typically include mileage limits and fair-wear-and-tear conditions if you plan to return the vehicle.

Which may suit you

HP can suit drivers who want to own the car outright, keep it long term, or drive higher mileage. PCP can suit drivers who want lower monthly payments or who like to change car more often. The cheapest monthly payment is not always the cheapest option overall, so it is worth comparing the total cost.

Frequently asked questions

Which is cheaper each month?
PCP is usually cheaper month to month because part of the cost is deferred to the final payment. HP payments are typically higher for the same car and term.
Which one gives ownership?
HP gives you ownership once the agreement is settled. PCP only gives ownership if you choose to make the optional final payment.
Which is better for high mileage?
HP often suits high-mileage drivers because it does not normally carry mileage limits or excess-mileage charges.

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