Hire purchase (HP) and Personal Contract Purchase (PCP) are the two predominant forms of car finance. A HP is the traditional and simplest form of finance. The cost of the vehicle you are buying is spread over an agreed length of time, between 2 to 5 years and an agreed fixed interest rate is attached to the loan with the loan paid back over equal monthly instalments. A PCP is essentially a HP agreement, however part of the loan is not paid off during the loan term but as a single payment at the end of the loan period. This payment has several names – a residual, balloon or guaranteed future value, but is essentially a lump sum that is owed on the car. None of this residual amount is paid off with your monthly payments and a PCP contract will typically provide lower monthly instalments. PCP contracts are well established in the new car market. Oodle Finance does not offer PCP car finance.