The Difference Between PCP And HP

If you’re looking for Cars for sale in Clacton, come on down to our showroom here at Holland On Sea Motors and take a look at our wide range of cars. We sell used cars both outright and on finance, our team of professionals will help you throughout the whole process. 

It’s important that you come and take a look at our cars before you purchase and fully commit to the vehicle. We will give you the opportunity to take the car for a test drive, giving you a good feel of the new set of wheels, it’s important for you to try before you by. Our team is highly experienced with years worth of experience in the car industry, if you have any questions we can help you today!  

If you’re looking to purchase your car on finance, it’s important for you to understand the difference between HP and PCP. Let us tell you about the benefits of financing your vehicle and the difference between the two.  

Let’s establish what financing your car is all about. You will make a deposit of the car to secure the deal, from here a finance company will loan you the rest of the money to cover the price of your vehicle. You will pay this back over a certain amount of time which is agreed in the contract with monthly installment. 

What is Hire Purchase (HP): This is a finance option which we offer here at Holland on Sea Motors. If you want to pay monthly installments which ultimately leads to you owning your car at the end of the agreement, this is the best option for you. This is the most cost-effective way for you to finance your vehicle. 

When opting for Hire Purchase, you will pay a deposit of 10% of the value of the vehicle. You will then pay monthly installments over 5 years, and in this time you will repay the money you have loaned plus interest. If buying a new car outright isn’t financially available to you, then this is the perfect solution for you.  

The Benefits Of HP. 

1. You will own the car outright at the end of the agreement. 
2. No Mileage limits as you will own the car at the end of the lease. 
3. The interest rates are lower for HP in comparison to PCP. 
4. The length of your term can be flexible reliant on your financial situation, this can be between 1-5 years. 

What is Personal Contract Purchase (PCP): If you’re somebody who likes to change your car every couple of years, This will be the best-suited option for you. This includes you paying a low monthly cost each month, suited to each individual budget. 

This option is available to help those who aren’t in the financial position to buy a new car outright, this loan is designed to help you get a new car at an affordable monthly price. If your someone who values your set of wheels, then a personal contract purchase is the right option for you. 

Let’s discuss the 3 main components which make up the PCP agreement. 

1. The Deposit: You will be asked to place a deposit on the vehicle, usually 10% of the value of the vehicle. It’s important for you to bear in mind that this will vary on each dealership. But the more money you pay upfront, the less money you will have to borrow, resulting in smaller monthly installments. 
2. The Amount You Borrow: The finance company that you are borrowing money from will predict the amount your vehicle will be worth at the end of the lease. From here they will put together a sum of money plus interest which will be required for you to pay back in monthly installments. As time goes on and the amount of miles are car has driven, your vehicle will decrease in value. 
3. The Balloon Payment: At the end of the agreement you will have the opportunity to pay the difference between the amount you have already covered and the value of the vehicle. It will depend on each individual, but at the beginning of the agreement, you will establish if you want to keep the car at the end of the lease. If you don’t want to then you can choose to take out another car of your choice out on finance. 

For any further information, get in touch with our team here at Holland on Sea Motors to find out all there is to know about financing your vehicle. If you’re looking for a used car in Clacton on sea, we can help you today!