What is the difference between PCP, LP and HP agreements?
All are types of hire purchase agreements and are protected by the Consumer Credit Act 1974. The main differences are: • Hire Purchase Agreements (HP) Payments are made evenly over the period of the agreement. • Lease Purchase (LP) Equal Payments are made over the period of the agreement together with an agreed final payment. The effect is a low monthly finance payment without mileage restriction. • Personal Contract Purchase (PCP) Equal payments are made over the period of the agreement together with a final payment (equal to the estimated future of the car) being made at the end. Provided that the agreed mileage has not been exceeded the vehicle can be returned to the finance company instead of making the final payment. The effect is a lower monthly finance payment. In all cases the car remains the property of the funder until the final payment is made by you.
