PCP vs lease vs HP: which kind of car finance fits you?

Side by side

Sources: MoneyHelper guides to PCP and PCH; BVRLA leasing FAQ; Consumer Credit Act 1974 sections 99 and 100 (listed below).

Personal lease (PCH)

You pay an initial rental, then fixed monthly rentals, and return the car at the end. MoneyHelper says the upfront payment is usually three to six months of payments, and that lease monthly payments are usually cheaper than PCP or HP. On CarJab, most lease offers are 1 or 12 months up front. You agree an annual mileage and pay a per-mile charge above it, plus charges for damage beyond fair wear and tear. You normally insure the car, and the BVRLA notes road tax (vehicle excise duty) is provided on contract hire.

The lease total is the initial rental plus one fewer monthly payment than the contract length. See how lease totals are calculated.

PCP

You pay a deposit, then monthly payments, and at the end choose between paying the optional final payment to keep the car, handing it back, or part-exchanging. MoneyHelper explains that the final payment is set at the start from the guaranteed minimum future value (GMFV), the monthly payments cover the rest of the price after the deposit, and interest is charged on everything you borrow, including the final payment. Mileage and condition rules apply if you hand the car back. More in balloon payments and excess mileage.

HP

You pay a deposit and then instalments that cover the whole price plus interest. There is no final payment and you own the car after the last instalment. MoneyHelper notes HP monthly payments are usually higher than both a lease and a PCP, and that dealers do not offer HP as often. CarJab has few live HP offers for that reason.

Real examples on CarJab (2 October 2026)

The same model can appear as a lease from one dealer and a PCP from another. These are real offers as listed on CarJab on 2 October 2026. They are not like-for-like: the mileage allowances differ, and the dealer prices may have changed since.

On the PCP, the dealer's figures add up if there are 47 monthly payments with the optional final payment due in month 48 (the usual PCP shape): £7,025 + £4,750 + 47 × £323.46 + £13,049 + the £10 option-to-purchase fee = £40,037. Handing the car back instead of paying the final payment would have cost you the deposit plus 47 monthly payments, £22,227.62, with a 10,000-mile annual allowance. The lease would have cost £17,392.80 with a 5,000-mile allowance. See the live offers on the CUPRA Leon Estate page.

Which should you choose?

• Lease if you want a new car for a fixed period, can predict your mileage and are happy never to own it.
• PCP if you want lower payments than HP but the option to buy, and can plan for the final payment (or are happy to hand back).
• HP if you want to own the car outright at the end and drive without mileage limits.

Whichever you pick, compare the total you will pay over the contract, not just the monthly figure. MoneyHelper's PCP checklist (deposit, final payment, APR, total payable, mileage limit, wear and tear) is a good list of questions for any agreement.

Ending early

PCP and HP are regulated hire-purchase agreements. Under sections 99 and 100 of the Consumer Credit Act 1974 you can end one once you have paid half the total amount payable (MoneyHelper points out that for a PCP this includes the final payment, so it usually comes late in the deal); you may still be charged if the car has not been taken reasonable care of. A lease has no such statutory right; the BVRLA says early termination may not be allowed and can cost much more than 50%, so check the contract.

The FCA's car finance compensation scheme covers some PCP and HP agreements taken out between 6 April 2007 and 1 November 2024. It does not cover personal contract hire (leases).