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What is the difference between PCP, Hire Purchase and Personal Contract Hire?

If you are one of the many who are unsure on whether you are eligible to make a mis-sold car finance claim, it’s important to determine what type of finance agreement you had. Below, we break down the differences between PCP, Hire Purchase and Leasing.


21 March 2024

With millions of people potentially being mis-sold car finance, many people are checking to see if they are eligible to make a claim. However, with all the admin and logistics required to make a claim, it can look complicated and feel overwhelming.

If you are one of the many who are unsure on whether you are eligible to make a claim, it’s important to determine what type of finance agreement you had. Below, we break down the differences between PCP, Hire Purchase and Leasing.

What is PCP?

PCP, a personal contract purchase is a way of spreading the cost of your car across monthly payments. At the end of your contract, you can decide on whether you want to keep the car by paying one final pre-agreed ‘balloon’ payment, hand the car back to the dealership or use it as a deposit for your next car. Your contract details will tell you if you purchased a car on PCP and if you did before the 28th January 2021, you could be eligible for a claim in the ongoing car finance reclaim.

What is a Hire Purchase?

Hire Purchase is a way to finance a car with fixed monthly purchases as a way of spreading the cost of the car. The loan is secured against the car, so you don't own the vehicle until the last payment has been made. It usually requires a deposit and then you pay off the remaining cost of the car for a fixed amount of time. The mis-sold car finance claim does include those who have purchased or currently purchasing their car via hire purchase, and you can easily check by inputting your registration here. If you are unsure on how to find out previous registrations, this guide can help you.

What is a Personal Contract Hire?

Personal Contract Hire or leasing is a log-term rental agreement where you pay a set amount each month to use the car, similar to a Hire Purchase. However, with this agreement, you are not able to purchase the car. Unfortunately, this type of car contract is not included in the mis-sold car finance claim.

At Slater and Gordon, we are car claims experts and are on hand to help with any queries you may have. For more information, contact us at carfinanceclaims@slatergordon.co.uk

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What is collective action?
When a lot of people are hurt, either physically or financially and whether it happens as a result of negligence or other incidents that are somebody’s fault then collective action is a legal solution that enables you to share risks, knowledge and rewards with others who are in the same boat. You benefit from having the strength in numbers to take on even the mightiest corporations.
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Mis-sold car finance claims

If you have bought a car, van or motorbike through a finance deal before 28 Jan 2021, you could be one of the thousands in the UK to be owed mis-sold car finance compensation.

Enter your details to find out if you are eligible to claim compensation.

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