Hire purchase is similar to buying the new car outright using finance but you do not own the vehicle until you make the final payment which is typically in 3 – 5 years’ time.  Hire purchase is a secured loan based on making monthly payments. Unlike PCH or PCP, you must pay for the entire cost of the car and you will own it once you have paid all the monthly instalments and a final nominal transfer fee. Monthly payments are therefore much higher than when leasing on a contract.

Personal Contract Hire (PCH) is a personal car leasing product. You pay an upfront fee (usually 3 months depending on your credit rating) and then a monthly car lease fee to obtain a new car for a period of typically between two to four years but you do not have the option to buy the CLICK TO READ MORE >>>

Personal Contract Purchase (PCP) is similar to PCH in that in order to obtain a new car you pay a specified deposit, commit to a monthly payment over a period which is typically 2 to 4 years, and agree an annual mileage.  Legal ownership is retained by the finance company.  However, the difference between PCP CLICK TO READ MORE >>>

The advantages of Hire Purchase over a personal loan are: Hire purchase is cheaper because the finance company retains ownership of the car until you make your final payment (i.e. it is secured).  If you are unable to keep up your monthly payments then they will simply take the vehicle back. Hire purchase is widely available CLICK TO READ MORE >>>

When looking at hire purchase relative to PCP or PCH: You will be committed to a much higher monthly payment As you pay interest on the whole value of the car, hire purchase is not a good choice if you only plan to  keep the car for 2-3 years;Hire purchase is not a flexible option CLICK TO READ MORE >>>