Motor Finance explained

Motor finance provides an essential lifeline for millions of working families who rely on having the ability to access affordable finance to get a car or van to help them go about their daily business. The BVRLA has provided advice to help customers demystify the various types of motor finance.

PCP and PCH motor finance products give customers choice when leasing:

Want use of a car, changing it every few years for another new one?

Personal Contract Hire (PCH) is a type of long-term rental that will suit you if you are not looking to buy the car at the end of your contract and won’t need to change the car before the end of the contract. You lease the car for an agreed period of time by making fixed monthly payments. When the contract expires you simply return the car.

Want use of a car and would like option to buy at the end of the contract?

Personal Contract Purchase (PCP) is similar to Hire Purchase agreement as you will usually pay an initial deposit, followed by monthly instalments. The monthly instalments pay off the depreciation of the car, and not its entire value, over the course of the term. When you get to the end of the agreement, you either return the car or pay a final balloon payment if you want to keep it.

Want to buy a car and need finance?

Personal Loan (PL) is a way of financing your car purchase. It can be for the full purchase amount or it can be used to make up a shortfall if you plan to pay with cash.

Hire Purchase (HP) requires payment of an initial deposit and you will pay off the entire value of the car in monthly instalments. When all payments have been made, the HP agreement ends and you own the car.

Read the full Motor Finance Factsheet


Look for a BVRLA member when leasing a vehicle

Legitimate leasing brokers adhere to Financial Conduct Authority rules and will carry out credit and affordability checks. Those who don’t, will not be legitimate traders and could be out to scam you.


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