If you're considering a new car but not sure whether to lease or finance, understanding the difference between PCH, PCP, and HP is essential. These are three of the most common ways to get a vehicle in the UK, and each has its own pros, cons, and suitability depending on your needs.
In this guide, we explain how each option works in plain English so you can choose the right one for your lifestyle and budget.
Looking for affordable personal car hire lease options? Check out our car leasing deals for personal and business users across the UK.
What is PCH (Personal Contract Hire)?
PCH (Personal Contract Hire) is a form of long-term car rental. You pay fixed monthly payments for an agreed period (usually 2–4 years) and return the car at the end. You don’t own the vehicle and there’s no option to buy.
PCH is ideal if you:
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Want a brand-new car every few years
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Prefer fixed monthly payments with no balloon payment
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Don’t want to worry about resale value
Most car leasing in the UK today is done through PCH, especially for electric lease car deals.
What is PCP (Personal Contract Purchase)?
PCP (Personal Contract Purchase) is a type of finance agreement where you pay a deposit, then monthly instalments over 2–4 years. At the end, you can either:
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Return the car
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Pay a balloon payment to own the car
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Part-exchange it for a new one
PCP works best if you:
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Want lower monthly payments than hire purchase
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May want to buy the car later
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Need more flexibility at the end of the contract
While PCP gives you options, it can involve extra charges if you exceed the mileage limit or damage the car.
What is HP (Hire Purchase)?
HP (Hire Purchase) is a simple finance method. You pay a deposit, followed by fixed monthly payments. At the end of the term, you automatically own the car.
HP is a good fit if you:
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Want to own the vehicle outright
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Prefer fixed payments without a final balloon cost
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Intend to keep the car long term
HP is typically used for both new and used vehicles.
Quick Comparison Table
|
Feature |
PCH |
PCP |
HP |
|---|---|---|---|
|
Ownership |
No |
Optional (via balloon) |
Yes |
|
Monthly Payments |
Fixed, usually lower |
Lower than HP |
Higher |
|
Upfront Deposit |
Usually low |
Low–medium |
Medium–high |
|
End of Term |
Return car |
Choose to return or buy |
Own the car |
|
Mileage Limits |
Yes |
Yes |
Usually no |
|
Flexibility |
Limited |
High |
Medium |
Which Option Is Right for You?
-
Choose PCH if you want simplicity, new models often, and no ownership.
-
Choose PCP if you may want to own the car later or want more flexibility.
-
Choose HP if you want to eventually own the car and are happy with higher payments.
If your goal is to drive a new car without long-term commitment, consider car leasing through a personal car hire lease.
For electric cars, browse our electric lease car deals UK page.
Ready to lease your next car? Explore our latest car leasing offers and drive the car you want, on your terms.
FAQs – PCH vs PCP vs HP
PCH is leasing with no option to buy, while PCP gives you the choice to buy the car at the end via a balloon payment.
HP leads to full ownership and has no final payment, but PCP usually has lower monthly costs and more flexibility.
Yes, many electric lease car deals in the UK are offered through PCH agreements.
PCH and PCP tend to have lower monthly costs than HP, but PCH does not lead to ownership.
Yes, but there may be early termination fees. Always check your contract.