google reviews logo
{{location.name}}
{{location.postalCode}}
{{location.telephone}}

Finance Guide – PCP vs Lease vs HP

What's the difference between PCP, HP and leasing? Explore our straightforward car finance guide and understand how each option works with Gravells.

Understanding your car finance options

Choosing your next car is only part of the decision — you'll also need to decide how you want to pay for it.

Personal Contract Purchase (PCP), Hire Purchase (HP) and leasing are three different ways of funding or using a car, and each works differently.

Our Gravells guide explains the basics to help you understand the options before discussing your individual requirements with our team.

Flexibility at the end of your agreement.

  • Pay an initial deposit followed by monthly payments

  • An optional final payment is deferred until the end

  • Choose whether to keep or return the car at the end

  • Mileage and vehicle condition terms apply

  • You don't own the car unless you make the final payment

Designed for ownership.

  • Pay an initial deposit followed by monthly payments

  • Payments cover the financed cost of the vehicle plus interest

  • No large optional final payment in a standard HP agreement

  • You'll own the car once all required payments have been made, including any option-to-purchase fee

  • Monthly payments can be higher than an equivalent PCP

Long-term vehicle hire.

  • Usually involves an initial payment followed by fixed monthly rentals

  • Choose an agreed contract length and mileage

  • Return the vehicle at the end

  • No option to own the car as part of the agreement

  • Excess mileage and vehicle condition terms apply

What's the difference between PCP, HP and leasing?

The main difference is what happens at the end.

With HP, you're working towards owning the car.

With PCP, you have a choice at the end of the agreement. You can make the optional final payment to own the vehicle or return it, subject to the terms of your agreement.

With a lease, you're hiring the vehicle for an agreed period and return it when the agreement ends.

*Standard agreements can vary, so always check the specific terms you're offered.

Which option should I consider?

There's no single finance option that's right for everybody.

Before deciding, think about:

  • Do I eventually want to own the car?

  • How much can I comfortably afford each month?

  • How much can I put down initially?

  • How many miles do I expect to drive?

  • Do I like changing my car every few years?

  • Would I prefer flexibility at the end of the agreement?

Our Gravells team can explain the finance options available on the vehicle you're considering so you can make your own informed decision.

car finance faq's

Not during the agreement. If you want to own the vehicle at the end of a PCP, you'll need to make the optional final payment and any other applicable amount set out in your agreement.

Once all required payments under the HP agreement have been made, including any applicable option-to-purchase fee, ownership can transfer to you.

No. With Personal Contract Hire, you're hiring the vehicle for an agreed period and return it at the end.

PCP agreements normally include an agreed mileage allowance. Additional charges may apply if you return the vehicle having exceeded the agreed mileage.

Your PCH agreement will specify an agreed mileage. Excess mileage charges can apply if you exceed it, so it's important to choose a realistic allowance when arranging your lease.

Yes, changing your car is one of the options you can consider at the end of a PCP agreement. Depending on the vehicle's value and outstanding finance, there may be equity that could potentially contribute towards another vehicle.

Car finance applications are subject to status and lenders will assess your application before deciding whether to provide credit. Complete a soft motor credit check here without impacting your credit score.

Early settlement may be possible depending on your agreement. Contact your finance provider for an up-to-date settlement figure and information about the terms that apply to you.

Explore car finance with Gravells

At Gravells, we know car finance terminology can sometimes feel complicated.

Our teams across Kia, Renault and Dacia, as well as our used car dealerships, can explain the finance options available on your chosen vehicle and answer your questions before you enter into an agreement.

Always consider the total amount payable, APR, monthly payments, initial payment, contract length and any final payment or mileage restrictions when comparing finance offers.