Thinking of financing your next vehicle? Take a look at the differences between PCP, HP, and PCH

At Griffin Mill, we offer a range of finance options that are both affordable, flexible and can be tailored to your individual needs. But if you are financing with us for the first time, it’s handy to be aware of the basic options that are available.

Personal Contract Purchase (PCP)

Starting with Personal Contract Purchase, the most common car financing option, these plans are commonly chosen by those who favour the idea of changing their car every few years. Typically, an initial deposit is paid upfront, usually holding 10% of the car’s value, followed by a fixed term agreement of monthly instalments between 24 and 60 months. It’s important to know that the monthly payments you will make are reflective of the depreciation of the car and not it’s entire value; so at the end of the agreement, a final payment must be made if you so choose to keep the vehicle (referred to as Guaranteed Future Value (GFV) ).

When the new vehicle has been chosen, you will then agree your annual mileage and decide on the agreement term with one of our Business Managers. The vehicles guaranteed Minimum Future Value at the end of the agreement will then be determined, and a deposit and monthly amount that works for you will be set up.

You are left with three options at the end of a PCP; Return, Retain with an optional final payment, or Renew for another car by depositing any remaining equity.

Hire Purchase (HP)

Hire Purchase is a popular option for financing both new and used vehicles, in both instances you will own the car outright at the end of your agreement. Like PCP, it begins with an initial deposit payment followed by agreed monthly instalments until the full value of the vehicle is paid off. The length of the agreed term is variable depending on personal circumstances. It’s important to note that monthly payments may be higher with the HP option, but once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the car.

Personal Contract Hire (PCH)

Personal contract hire (PCH) is a form of leasing that lets you have the use of a car for between one and four years. It is a great option if you want to drive a new car regularly, all the while keeping monthly payments down. Similarly to PCP, you’re only repaying a fraction of the value of the car – the main difference being that with PCH there is no option to buy the car outright at the end of the agreement. The process begins by deciding how much you want to pay each month for the use of the car, and how much mileage you expect to incur. Most deals will then require you to put down a deposit (usually the equivalent of 8 to 10 monthly instalments) followed by fixed monthly payments. At the end of your agreement, you simply hand back the car.

We hope this gave you an insight into the options available to you when you next purchase a car, if you have any questions or queries, please don’t hesitate to reach out to our team to find out more.