Which Used Car Finance Is Right For Me? | RWC Motor Company

PCP vs HP: Which used car finance is the right one for me?

When it comes to buying a car, here at RWC Motor Company we know hard it can be to get the funds together to pay for your used car all in one go. Because we stock such a wide selection of used cars in Essex we are here to help when it comes to finding the right used car finance in Essex for you – whether it is PCP or HP. If you are brand new to used car finance in Essex then we are here to do some jargon busting for you by explaining what the difference is between HP and PCP.

We’ll start with PCP finance, which stands for Personal Contract Purchase. PCP car finance is essentially a loan that helps you buy a car, you won’t be paying off the full value of the car and you won’t actually own the car in full (unless when the contract ends you choose to pay off the lump sum).

With PCP it breaks down into three main parts:

• Your initial deposit: Your deposit can be any amount of cash you want to put into the deal, with some car finance companies you can even get no deposit finance BUT usually your deposit would be between 10 and 20% of the cars value. What you should know is the larger deposit, the less of the car you finance and the lower the monthly payments.
• Your borrowing amount: The value of the car minus the deposit and plus the amount of interest you will be charged. This is what you will pay back in your monthly payments which can vary in length dependent on how long your contract is for.
• The final payment: Sometimes called a balloon payment, this is the amount you pay if when your used car finance contract ends on your PCP deal you love the car that much you want to keep it. You can also choose to trade your car in on a PCP deal and get yourself a newer car and start a new PCP deal.

HP finance differs from PCP. HP stands for Hire Purchase and despite it’s differences it also has many similarities to PCP finance. With a Hire Purchase agreement you will pay your deposit come the start of the agreement, again between 10 and 20% of your vehicles value recommended. Your monthly payments is where a HP agreement differs from PCP, as your monthly payments will cover the whole cost of your car. Which means that come the end of your finance agreement you will own the car outright.

If this has created more questions than it has answered or you’re keen to explore more about used car finance in Essex with us at RWC Motor Company, feel free to contact us and we can help you discover what is the best finance deal for you on your used car in Essex.