Fund your car: PCP, HP, bank loan or savings?

In a forest of finance options, mega deals and valuation promises, it’s hard to know which way of buying a car is best for you. Here at Autosave, we want to make it as easy as we can by breaking it down. And of course, if you give us a ring, we’ll be more than happy to help you through all the options.

Finance options

PCP: Personal contract purchase

A form of Hire Purchase, PCP is the UK’s most popular way to finance your car, and we offer PCP right here at Autosave.

How it works

PCP is a form of finance where you pay a smaller amount each month towards your new motor for a contracted amount of time. When you get to the end of your contract, you’ll be faced with a lump sum in order to pay off the car in full and make it yours.

Just so you know, this can be referred to as a “balloon payment” or “minimum guaranteed future value.”

When you get to this point, you have 3 options:

  • Hand back the car, not pay the balloon payment and just walk away!
  • Use the difference between the balloon payment and true market value as a deposit for a new car
  • Pay a lump sum and own the car!


  • Usually cheaper per month than HP when you look at the same car
  • Many people want to change their car at the end of a PCP agreement anyway
  • You have options at the end of your contract

Things to consider

  • You can choose to pay a lump sum at the end of the agreement
  • Interest to pay which you wouldn’t have as a cash-buyer
  • You will need a deposit for the car at the start of the deal
  • You won’t officially own the vehicle until the final payment
  • You will have to agree on mileage limits, after all, the more miles you do, the less the car is worth
  • If you exceed the mileage agreed at the start of the contact and intend to return the vehicle, excess mileage charges will be applied

HP: Hire purchase

No, we’re not talking about the sauce. HP is another way of financing a new vehicle. There are a few differences between this form of finance and PCP, so read on to learn which one is right for you.

How it works

Like PCP, you’ll be paying money each month towards your new motor for a contracted amount of time. Whilst you are paying this, technically, the company still own your car, you are just “hiring” it. But, don’t let that put you off. At the end of the contract the vehicle will be completely yours, rather than needing to fork out for a balloon payment if you were on PCP.


  • You could get accepted for a HP deal even if getting turned down for a personal loan as it is secured against your new vehicle
  • You’ll be paying standard monthly payments instead of a massive pay out all at once


  • You will be paying interest
  • You won’t officially own the vehicle until the final payment
  • No option to change the car or hand it back at the end of the deal

Which finance suits you?

HP is ideal if you want to own the car at the end of your contract, whereas PCP is the best option if you’re likely to be looking for an upgrade!

Other ways of funding your car

Personal loan

This one is on you! Some people opt for a personal loan straight from their bank in order to purchase a new vehicle.

How it works

You can apply for a loan through your bank in order to get the cash for your new car. You’ll be seen as a “cash buyer” on the forecourt (or over the phone) as the money will be in our account to pay the car off in full.


  • You can see how much is left on your loan just by accessing your bank account
  • You can choose how long and how much you pay a month back to the bank


  • You may not get the money through immediately
  • You will still be paying back a monthly amount
  • You will be paying interest to the bank

Own funds

Got the funds in your account? No problem!

How it works

If you are called a “cash buyer” all it means is that you are not looking for a finance package as you have the funds for a new car in your account and will settle the bill there and then.


  • You won’t have a payment every month, so the only pennies that will come out of your account will be your insurance and tax!
  • You needn’t worry about any lengthy contracts, the car is yours there and then
  • You can part exchange your vehicle when you upgrade


  •  A lot of people won’t be able to save the lump sum they need to pay for a vehicle in full
  • You can’t just upgrade your vehicle like you would be able to with a PCP package, you would need to save up for a new car
  • You may have to sell your vehicle before purchasing your next one to get the funds

VAP Insurance

This is just a little something to think about if you’re buying a car. And just so you know, some other places may call this GAP insurance.

Should the worst happen and you write off your car or it is stolen, your insurance is likely to only cover you for the market value of the vehicle. That means that you may not get cover for the amount that you’re paying for the car as it is a little older and has a few more miles on the clock.  But, with VAP insurance, you can rest easy you’ll get back the cash you’ve invested, and we offer that here at Autosave!




  • On: 04 October 2018
  • By: Unison Drive

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