• Book a Service
  • DEALERSHIPS
  • DEALERSHIPS
Group
honda finance banner

Honda Car Finance explained

Personal Contract Purchase

Personal Contract Purchase (PCP)

Personal Contract Purchase is a flexible funding solution that delivers peace of mind by guaranteeing a future value for your car. PCP is designed to keep your monthly payments lower compared to other types of financing like Hire Purchase.

How does it work?

PCP typically offers a lower monthly payment than Hire Purchase. This is because we defer part of your loan repayment until the end of the agreement, when you will then have three options.

So how does it work?.....

So how does PCP work?

https://www.hshmotorgroup.co.uk/assets/media/howdoespcpwork.jpeg
STEP 1 | Read more
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork.jpeg
STEP 1 | Read more
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork_1.jpeg
STEP 3 | Read more
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork_2.jpeg
STEP 4 | Read more
https://www.hshmotorgroup.co.uk/assets/media/howdoespcpwork.jpeg
STEP 1

Firstly, choose the car you want.
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork.jpeg
STEP 1

Agree on how much deposit you would like to put down. Then, estimate how many miles you will drive each year. Then agree how long you would like your agreement to run, between two and four years.
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork_1.jpeg
STEP 3

We will then use this information to calculate a Guaranteed Future Value [GFV]. This is what we predict the value of your car to be worth at the end of the agreement. The Guaranteed Future Value is deferred until the end of your agreement. Because this value is based on your estimated annual mileage, it is important to give an accurate estimate, as you may have to pay excess mileage charges if you exceed your total agreed mileage for the agreement.
https://www.hshmotorgroup.co.uk/assets/media/pcphowdoesitwork_2.jpeg
STEP 4

Your monthly payments are worked out on the difference between the GFV and the price of the car once your deposit has been taken off and interest added. This means you typically have lower monthly repayments than with Hire Purchase. At the end of your agreement you have the flexibility of 3 options.

When it comes to the end of your agreement, you will have three options to choose from:

Retain

Return

Renew

Important information to consider:

 

There are some aspects of Personal Contract Purchase that you need to be aware of to help you make an informed choice to decide if PCP is right for you.

As your PCP agreement includes a Guaranteed Future Value (GFV) you have the ability to return the car to us (subject to the terms of the agreement). This provides you with some protection from market depreciation.

You have the right to withdraw from your PCP agreement within 14 days from the start of your agreement. You can also partially or fully settle your agreement at any time (subject to the terms of the agreement).

 

Personal Contract Purchase may not be the right finance product for you for the following reasons:

If you are a high annual mileage user then PCP is unlikely to be suitable for you as there is a maximum total contracted mileage limit.

If you prefer to change your car after more than 4 years then PCP may not be right for you as the maximum PCP term is 4 years.
Interest is payable on the amount you borrow including the Guaranteed Future Value (GFV). The Total Amount Payable (the overall cost) is likely to be higher than a Hire Purchase agreement with the same loan amount and term, as your balance will reduce slower due to the deferred GFV.
If you do more miles than you estimated and/or there is damage to the car, there may be additional charges if you decide to return your car to us.

You are not guaranteed to have any equity at the end of the agreement, if market conditions mean your car is worth less than the GFV. This may mean you will require an additional deposit if you choose to part exchange at the end of the agreement.

You will own the car outright once all regular payments, GFV and any option to purchase fees are paid.

Hire Purchase

Hire Purchase (HP)

Hire Purchase is a finance product offered by Honda Financial Services which allows you to budget effectively because the interest rate and monthly payments are fixed at the start for the whole term of the agreement.

So how does HP work?

https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork.jpeg
STEP 1 | Read more
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork_1.jpeg
STEP 2 | Read more
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwokr.jpeg
STEP 3 | Read more
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork_1_1.jpeg
STEP 4 | Read more
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork.jpeg
STEP 1

Choose the car you want.
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork_1.jpeg
STEP 2

Agree how much deposit you would like to put down. Before you start your agreement, you can adjust term to best suit your ideal monthly budget, from anywhere between one and five years.
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwokr.jpeg
STEP 3

The rest of the cost of the car, plus interest, is paid in equal monthly payments. Once you’ve paid all the monthly payments and the option to purchase fee, you own the car.
https://www.hshmotorgroup.co.uk/assets/media/hphowdoesitwork_1_1.jpeg
STEP 4

You could then choose to go back to your Honda retailer and part exchange your car for another new Honda.

Important information to consider: 

 

There are some aspects of Hire Purchase that you need to be aware to help you make an informed choice to decide if HP is right for you.

There are no mileage restrictions as part of the finance agreement.

The Total Amount Payable (overall cost) is typically lower than Personal Contract Purchase on an agreement over the same term.

You have the right to withdraw from your HP agreement within 14 days from the start of your agreement. You can also partially or fully settle your agreement at any time (subject to the terms of the agreement).

 

Hire Purchase may not be the right finance product for you for the following reasons:

With Hire Purchase there is no deferred payment amount (the Guaranteed Future Value or GFV) so you may pay more a month compared to PCP.

Because there is no GFV, you have less protection against depreciation than with a PCP.

You will not own the car outright until all regular payments and any option to purchase fees are paid.

To keep monthly payments down, you may need to take your loan over a longer term.