PCP Myth #7: Small deposits are better Dealers love telling customers that putting in a large deposit on a PCP is wasting your money, or pouring it down the drain, or burning pound notes, or crazy, or poor financial strategy. But once again, that's simply not true.28 Jan 2021
What is better HP or PCP?
The two most common types of car finance are Hire Purchase (HP) and Personal Contract Purchase (PCP). To put it simply, HP could be the better option if you plan to own your new car at the end of the agreement; whereas PCP may be more suitable if you like to change it every few years.13 Oct 2021
Is it worth paying PCP early?
Paying the settlement figure to clear your finance is cheaper than continuing with your repayments. You want to own the car outright. When you finance a car through hire purchase or PCP, you won't own the car until you make all your payments, so paying it off early means you own it sooner.20 Jul 2021
What are the pitfalls of PCP?
You will have to make a decision at the end of the contract as to whether you wish to sell the vehicle, return it or keep it. You must have fully comprehensive vehicle insurance. A charge can be made for damage to the vehicle (not fair wear & tear)
Is PCP worth doing?
Personal contract plans (PCPs) are one of the most popular ways to buy a car, making up for around 80% of all new car registrations. They're a good option for people who want a car that's outside their budget, because the price is offset by a final 'balloon' payment that doesn't need to be paid if you return it.
Is it worth putting a big deposit on PCP?
We recommend paying as much as possible for the deposit on a PCP deal. The more you can put down, the cheaper your monthly payments will be, while there'll be less interest to pay on the finance instalments.
What is the difference between PCP HP and lease?
PCPs are not a lease. PCPs were originally designed to be used by people who put down relatively small deposits, with the monthly payments kept lower than they would be under a simple HP agreement through a proportion of the outstanding balance being set aside until the end of the agreement.
Is PCP a good option?
PCP car deals are so attractive to car buyers because the monthly payments tend to be lower than other forms of finance. This is down to a number of factors, including: The monthly payments go towards the depreciation of the vehicle over your term (i.e. contract length and annual mileage), not the full value of the car.
Why is PCP cheaper than HP?
As the take up of PCPs has increased, so the popularity of HP has waned. HP can work out cheaper than a PCP over the lifetime of a loan because with HP you're paying off the amount borrowed more quickly. With a PCP, if you decide to buy at the end of the agreement, you have to settle the big balloon payment.18 Dec 2020