Personal Contract Hire (PCH) vs Hire Purchase (HP) – which type of car finance is best for you?

Choosing the right car finance for you is imperative to your car search and purchase. Here, we pit Personal Contract Hire (PCH) vs Hire Purchase (HP) explaining the key differences, and the pros and cons that come with each.

What is PCH and how does it work?

Personal Contract Hire (PCH) is the official term used for car leasing – what we are renowned for. Leasing is a type of long-term rental. It’s usually a low-cost, and low-commitment way for you to drive a car of your choosing over a set period.

You will only cover the cost of depreciation on the vehicle. This means that you can benefit from lower fixed monthly payments whilst choosing a vehicle that you may not be able to afford otherwise.

If you’re not looking to buy the car at the end of the contract or change your car during the agreement term, PCH will work well for you. Simply return your car when the contract expires.

Unlike PCP, however, you can choose to include maintenance. This includes MOTs, services, and road tax – all in your monthly payments. It’s great for those who want less to worry about during the time that you drive the car. 

Pros and cons of PCH


  • No hassle as you don’t need to worry about re-selling the car at the end of your contract.
  • Build maintenance and road tax into your monthly payments, avoiding unexpected costs of repairs.
  • Lower monthly costs in comparison to if you were buying a car.
  • Choose from a range of new cars that you may not be able to afford otherwise.
  • Low tax rates for business customers.
  • £0 deposit option with us.


  • You won’t have the option to buy the car at the end.
  • Mileage restrictions with excess charges.
  • You’re tied in for the full duration of the contract and there may be high early repayment charges if you need to stop or change the contract.
  • Any damages outside of minimal wear and tear will face charges.

What is HP and how does it work?

A Hire Purchase (HP) car agreement is the most practical way for private motorists to get a car. Hire purchase agreements can be offered on new and used cars. HP allows you to spread the cost of buying a vehicle rather than putting up all the cash up front. Read all about HP car finance here.

Pros and cons of HP

From driving away in a car of your choice that you may not have been able to buy outright, to no restrictions on mileage, we lay out the pros and cons of HP car finance here.

Personal Contract Hire vs Hire Purchase – which type of car finance is ideal for you?

Only you know which type of car finance suits your circumstances. 

PCH is undoubtedly the simplest and most stress-free way to get behind the wheel of a car you really want. It includes maintenance in your monthly payments which takes the pressure off and lets you enjoy day-to-day driving. However, at the end of your agreement, you must hand the car back to the finance company. There’s no option to part exchange or keep it.

If you’re unable to afford cash up front and prefer hassle-free motoring with the advantage of owning the car, at the end of your agreement, HP is most likely the best car finance for you. 

Are there any alternatives?

There are several different car finance types, and your priorities will determine which is best for you.

For those with good credit, a personal loan could be a great option. This amount can be for the full purchase cost of the vehicle you want to buy, or to make up the shortfall of cash. This is best for those wanting ownership of a vehicle.

Personal contract purchase, or PCP, is a finance option that allows you to change your vehicle regularly with lower monthly payments covering just the depreciation cost of the car.

You can read more about PCP here.

How to get a PCH or HP deal

You can get pre-approved for finance and decide on what type you’d like to go for using our Apply Now feature. This won’t affect your credit score, and you can almost instantly find out what your approval rating would be.

Use our fast soft search credit rating check if you would qualify for a personal contract hire or hire purchase car deal. This will not affect your credit rating.