PCP or hire purchase: what people actually chose

• 27 / 12Hire purchase / PCP
• 21 of 39Have a final payment
• 36 of 39Bought used

What this covers

Again, not one customer, the pattern across 39 completed car deals. The choice between hire purchase and PCP is the decision people find hardest, and seeing what others actually picked is more useful than a definition.

The split

Twenty-seven chose hire purchase; twelve chose PCP. Twenty-one of the thirty-nine agreements carry a final payment of some size. Thirty-six of the thirty-nine cars were used.

How they differ

• Hire purchase. You are buying the car. Payments clear the whole balance and it is yours at the end. Higher monthly cost, no decision to make later.
• PCP, part of the value is deferred to a final payment based on what the car is expected to be worth. Lower monthly cost, and at the end you settle it, refinance it, or hand the car back.
• Either with a deposit, 30 of the 39 put money in at the start, which lowers the monthly figure and the total cost under both.

Which suits whom

The honest test is what you intend to do at the end of the term. If you expect to keep the car and drive it into the ground, hire purchase is usually the cheaper answer overall. If you change car every three or four years and want the lowest monthly commitment meanwhile, PCP does that, provided you go in knowing the final payment exists and how you intend to deal with it.

A final payment is not a discount. It is money deferred, and it still has to be settled, refinanced, or covered by handing the car back.

Key outcome

Hire purchase remains the majority choice on used cars, and the deciding factor is almost never the monthly figure on its own. It is whether the buyer wants to own the car at the end or change it.

The question I ask first is not what you want to pay each month. It is what you want to be holding in four years. Answer that and the product picks itself.