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PCP vs HP Car Finance Ireland 2026 — Personal Contract Purchase vs Hire Purchase Guide
2026-04-20
12 min read
PCP vs HP — Ireland's Two Most Common Car Finance Options
PCP (Personal Contract Purchase) and HP (Hire Purchase) are the two main ways to finance a car in Ireland. Over 80% of new cars in Ireland are bought on finance, with PCP being the most popular choice for new cars and HP more common for used cars.
| Feature | PCP (Personal Contract Purchase) | HP (Hire Purchase) |
|:--------|:--------------------------------:|:------------------:|
| Monthly payments | Lower | Higher |
| Balloon / GMFV at end | Yes | No |
| Own the car at end? | Only if you pay the GMFV | Yes automatically |
| Mileage limit (km) | Yes (typically 16,000-20,000 km/yr) | No |
| Best for | Changing car every 3 years | Keeping the car long-term |
Use our PCP vs HP Car Finance Calculator to compare exact numbers for your car in Euro — enter the price, deposit, APR, term, and see the real difference.
How PCP Works in Ireland
PCP is the most popular car finance method in Ireland. Here's how it works:
You pay a deposit (typically 10-20% of the car price)
Monthly payments cover the depreciation (the amount the car loses in value) plus interest on the full loan
A Guaranteed Minimum Future Value (GMFV) is set at the start — this is the car's predicted minimum value at the end
At the end (typically 3 years), you have three options
Example PCP: €30,000 car, €3,000 deposit, 42% GMFV, 3 years, 4.9% APR
Return the car — if within agreed km and good condition, walk away with no further cost
Part-exchange — use any positive equity as your next deposit
How HP Works in Ireland
HP is simpler than PCP and more common for used cars in Ireland:
You pay a deposit (typically 10-20%)
Monthly payments cover the full car value plus interest
No balloon payment at the end
You own the car after the final payment
Example HP: €30,000 car, €3,000 deposit, 3 years, 7.9% APR
| Component | Amount |
|:----------|:------:|
| Car price | €30,000 |
| Deposit | €3,000 |
| Amount financed | €27,000 |
| Monthly payment | ~€845 |
| Total to own | ~€30,420 |
PCP total to own: €28,440 vs HP total: €30,420 — PCP saves €1,980, but you need the €12,600 GMFV at the end to keep the car.
Key Differences for Irish Drivers
VRT Is Included in Both
Vehicle Registration Tax (VRT) is included in the car price that both PCP and HP finance. You don't pay VRT separately when financing a car — it's bundled into the on-the-road price.
Mileage — PCP Has km Limits
Irish PCP deals typically allow 16,000-20,000 km per year. Exceeding the limit costs 5-15 cent per km. For a driver doing 24,000 km/year on a 16,000 km/year allowance, the excess charge over 3 years would be:
| Excess km/year | Charge per km | 3-year penalty |
|:--------------|:-------------:|:--------------:|
| 8,000 km | 10c/km | €2,400 |
If you drive over 20,000 km/year, HP is usually better — there's no mileage restriction.
Manufacturer-subsidised APR is very common on PCP deals in Ireland (VWFS, Toyota Finance, Bank of Ireland, AIB).
When to Choose PCP in Ireland
PCP suits you if:
You change your car every 3 years — The most common Irish ownership cycle
You want lower monthly payments — PCP payments are typically 40-50% lower than HP
You drive under 20,000 km/year — Avoid excess mileage charges
You want a manufacturer-subsidised APR — Many Irish brands offer 0-3.9% APR on PCP
When to Choose HP in Ireland
HP suits you if:
You plan to keep the car for 5+ years
You drive over 20,000 km/year — No mileage penalties
You want to own the car outright — No balloon payment to worry about
You're buying a used car — HP is more widely available for older cars
Real-World Comparison: €30,000 Car, 3 Years
| Cost Component | PCP (4.9% APR) | HP (7.9% APR) |
|:--------------|:--------------:|:--------------:|
| Deposit | €3,000 | €3,000 |
| Monthly payment | €440 | €845 |
| Total over 3yr | €15,840 | €30,420 |
| Balloon (GMFV) | €12,600 | €0 |
| Running costs (3yr) | €10,500 | €10,500 |
| Total paid out | €38,940 | €40,920 |
| Car value after 3yr | -€18,420 | -€18,420 |
| Net cost | €20,520 | €22,500 |
| Winner | ✅ PCP saves €1,980 | |
What is the difference between PCP and HP in Ireland?
PCP has lower monthly payments because you only pay the car's depreciation plus interest. There's a guaranteed minimum future value (GMFV) balloon payment at the end if you want to own the car. HP has higher monthly payments covering the full car value, and you own it automatically at the end with no balloon.
Is PCP or HP more popular in Ireland?
PCP is the most popular finance method for new cars in Ireland — over 80% of new car finance agreements are PCP. HP is more common for used cars and for buyers who want to own the car outright without a balloon payment. Manufacturer-subsidised APR makes PCP very attractive for new cars.
What is a GMFV in Irish PCP agreements?
The Guaranteed Minimum Future Value (GMFV) is the car's predicted minimum value at the end of the PCP. It's set at the start by the lender. If you want to keep the car, you pay the GMFV. If the car is worth more, you have positive equity. The GMFV for Irish PCP deals is typically 35-50% of the car's price for 3-year terms.
What happens if I exceed the km allowance on a PCP in Ireland?
You pay an excess charge — typically 5-15 cent per km over the agreed annual mileage. Most Irish PCP deals allow 16,000-20,000 km per year. You can negotiate a higher allowance when setting up the agreement, which is usually cheaper than paying excess at the end.
Which is cheaper overall in Ireland, PCP or HP?
If you keep the car, PCP is usually cheaper by €1,500-€3,000 over 3 years because it has a lower total finance cost. However, you need the GMFV balloon at the end. If you return the car, PCP is significantly cheaper. HP is cheaper if you can't afford the balloon payment and would need to refinance it at a higher rate.
Can I get a PCP on a used car in Ireland?
Yes, many Irish lenders offer PCP on used cars up to 5-7 years old. The GMFV is lower on used cars (typically 25-35% compared to 35-50% for new cars), and APR rates may be higher. HP is still the most common finance for older used cars.
Do I need a deposit for PCP or HP in Ireland?
Most Irish finance deals require a minimum deposit of 10-20% of the car price. Some manufacturer PCP deals offer 0% deposit promotions. A larger deposit reduces your monthly payments and total interest on both PCP and HP.
What APR should I expect for PCP in Ireland?
Manufacturer PCP deals often have APR from 0-5.9% (subsidised). Standard PCP APR from banks like Bank of Ireland or AIB is 5.9-9.9%. HP APR is typically 6.9-11.9%. Your credit score has the biggest impact on the rate you're offered.
Is VRT included in PCP or HP finance?
Yes, VRT is included in the car's on-the-road price that both PCP and HP finance. The finance amount covers the full price including VRT, delivery charges, and dealer fees. VRT is not a separate cost for financed cars.
What happens if my car is worth less than the GMFV at the end?
If the car's actual value is less than the GMFV, you have negative equity. You can still return the car and walk away — the GMFV is guaranteed by the lender. If you want to part-exchange, negative equity rolls into your next finance agreement. This is more common when car values drop unexpectedly.
Can I pay off a PCP or HP early in Ireland?
Yes, the Consumer Credit Act gives you the right to settle early. You'll pay the outstanding balance plus up to 58 days' interest. Early settlement of a PCP may reduce total interest. For HP, you own the car sooner. Check your contract for any early settlement or termination fees.
Is HP better for high mileage drivers in Ireland?
Yes. If you drive over 20,000 km per year, HP is almost always better. PCP mileage penalties of 5-15c/km add up to thousands over 3 years. With HP, there's no mileage restriction at all — you own the car and can drive as much as you want.
How does PCP or HP affect mortgage applications in Ireland?
Both appear as monthly commitments on your credit report. A €440/month PCP or €845/month HP payment reduces your mortgage borrowing capacity. Lenders use a stress test — typically 5% of the outstanding balance — so a larger HP commitment may have a slightly bigger impact on how much you can borrow.
Which Irish lenders offer PCP and HP?
Major PCP and HP lenders in Ireland include Bank of Ireland Finance, AIB, Volkswagen Financial Services (VWFS), Toyota Finance, Kia Finance, Hyundai Finance, and BMW Financial Services. Credit unions also offer car loans which work like HP. Always compare the APR across multiple lenders before signing.