How Does Car Finance Work?

Honda PCP, PCH and HP explained

Let’s take a look at the answers to some common questions about finance that our sales team is often asked: How does PCP work? How does PCH work? And, overall, how does car finance work? PCP stands for Personal Contract Plan, PCH for Personal Contract Hire and we’ll also take a look at HP or Hire Purchase. We understand that buying your new Honda or used Honda is going to be a big investment for you and you’re keen to get it right. At Brayley Honda, we’re here to help, so please get in touch if you have any questions.

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Our Brayley Honda finance deals are provided for you through Honda Finance Europe Plc. Our Honda finance options have all been designed to be as flexible as possible to make buying your Honda as simple as possible. You’ll find that our Honda finance agreements offer you affordable monthly payments and we often have offers available with reduced monthly payments or useful deposit contributions. That means it’s easier to drive away in the Honda you really want, sooner than you might have thought and, sometimes, that you’ll be able to choose a higher specification too.

Personal Contract Plan (PCP)

PCP, a Personal Contract Plan, means you can choose the Honda you want, the amount of your deposit, the length of your finance agreement and your maximum annual mileage. At the end of the agreement, you’ll have three options. You can either purchase your Honda outright for a pre-agreed amount, which is known as the optional final payment or, you can just return the car with nothing more to pay, assuming you have taken good care of it and not exceeded your mileage limit. Alternatively, you can renew your PCP agreement and drive away in a brand new Honda – if your current Honda is worth more than final optional payment, then you can use the excess as a part or full deposit on your new Honda.

Honda Personal Contract Plan

Benefits of a Personal Contract Plan from Brayley Honda include:

Change your car more often and get the most recent model
Deposit amount is usually flexible
Your choice of repayment term / monthly payment amount
Monthly payments are usually less than for an HP agreement over the same term
Your monthly payments are fixed
At the end of the agreement, you can buy your car outright, return it or renew and drive away in the latest Honda model of your choice

Hire Purchase (HP)

Hire Purchase has been around for many years and still suits many people best, especially if you don’t want a mileage restriction and you want to own the car at the end of the agreement. HP allows you to pay an initial deposit, then choose the length of the finance term, usually between 12 and 60 months, depending on how much you wish to pay each month. At the end of the agreement, you’ll own the car, so you can continue driving it for as long as you like or trade it in for a newer model.

Honda Hire Purchase

Benefits of a Hire Purchase agreement through Brayley Honda include:

Flexible deposits
Choose your repayment term between 12 and 60 months
Monthly payments and interest rates are fixed
You own the car at the end of your HP agreement, if you have made all the payments

Personal Contract Hire (PCH)

A Personal Contract Hire agreement lets you rent your car from a selected range of new Hondas. You will not in any sense own the car and there is no provision for you to purchase it at the end of the agreement. This means that you never need to worry about depreciation or having to try to sell your car in due course. You will pre-agree your annual mileage, then the agreement term. Your monthly payments will comprise an amount for your rental plus VAT. There is also a pre-agreed annual mileage. At the end of the rental agreement, you must return the car.

Honda Personal Contract Hire

Benefits of a Personal Contract Hire agreement through Brayley Honda include:

Initial rental fee is flexible
Flexible rental agreement periods
Fixed monthly rental payments
Once the rental agreement is over, you just return the car
No need to worry about depreciation