Credit Union Loans for Cars Vs PCP and HP Finance

What is the difference between HP and PCP?

A Hire Purchase (HP) agreement is a way of paying for a new or used vehicle through an initial deposit followed by monthly instalments. At the end of the term, you will own the car outright (if fully paid for). A Personal Contract Purchase (PCP) agreement is a variation of HP. It is a way of financing new or used cars over an agreed period. It is effectively a long-term rental.

Advantages of PCP:

• Lower monthly payments than HP (for a comparable car and term).

• A low deposit at the beginning of the term.

• At the end of the agreement term, you have flexibility to decide what to do with the car.

• You will have a fixed monthly payment schedule which can help when budgeting.

Disadvantages of PCP:

• The monthly payments may seem small but remember there will be a lump sum to be paid at the end should you wish to “own” your car. If you are nearly at the end of your PCP term, you could consider one of our lower cost loans to pay this. 

• If you exceed the agreed annual mileage there will be a charge for each additional mile covered.

• When returning the car, it must be in good condition as any damages will be charged to you.

Advantages of HP:

• Monthly payments helping spread the cost and budget accordingly.

• A low deposit can be paid at the start of the agreement.

• No excess mileage charges, no matter how many miles you drive (unlike PCP).

Disadvantages of HP:

• Monthly payments are usually higher than some other finance options as you’re paying off the full value of the car. Try our LOAN CALCULATOR by way of comparison.

• You don’t own the vehicle until you’ve paid the full sum.

• Failure to keep up with payments can result in the vehicle being repossessed. 

PCP Finance deals Vs Harp and Crown Credit Union Loans

We’ve set out some examples from a local car dealership and their PCP deals in comparison to our Standard £5K+ (7.9% APR) and £20K+ (5.9% APR) loans. 

Our “total loan payable” examples (48 months) are between 13.2% - 15.9% less than the PCP finance payable for the same period.

Example of £20K+ value 

Example of £10K+ value ​

Harp and Crown Car Loan Benefits in summary:

• Remember our loan interest rates are fixed for the duration of your loan.

• Loan interest (APR) is only charged on your reducing balance.

• We can offer an affordable monthly repayment plan, spreading the cost over a maximum 5 years (60 months) term, whereas most PCP agreements tend to be over 48 months with a large sum to pay at the end, should you wish to buy your car outright.

• Our loan rates are clearly defined and there are no hidden fees.

• We won’t charge you any penalty for paying your loan off early.

• Members can apply for a loan 5 x their savings balance (with the exception of the Loyal Saver Loan)

Email creditunion@harpandcrown.co.uk or phone 028 9068 5198.

The Harp and Crown Credit Union provides safe, secure, flexible finances for the wider police family in Northern Ireland.