PCP vs HP Car Finance Ireland 2026 — Personal Contract Purchase vs Hire Purchase Guide

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.

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How PCP Works in Ireland

PCP is the most popular car finance method in Ireland. Here's how it works:

1. You pay a deposit (typically 10-20% of the car price)
2. Monthly payments cover the depreciation (the amount the car loses in value) plus interest on the full loan
3. A Guaranteed Minimum Future Value (GMFV) is set at the start — this is the car's predicted minimum value at the end
4. 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

| Component | Amount | |:----------|:------:| | Car price (inc. VRT) | €30,000 | | Deposit | €3,000 | | Amount financed | €27,000 | | GMFV (balloon) | €12,600 | | Monthly payment | ~€440 | | Total to own | ~€28,440 |

Your 3 Options at the End

At the end of your PCP term in Ireland:

1. Pay the GMFV (€12,600) and own the car
2. Return the car — if within agreed km and good condition, walk away with no further cost
3. Part-exchange — use any positive equity as your next deposit

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How HP Works in Ireland

HP is simpler than PCP and more common for used cars in Ireland:

1. You pay a deposit (typically 10-20%)
2. Monthly payments cover the full car value plus interest
3. No balloon payment at the end
4. 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.

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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.

APR in Ireland

| Scenario | PCP APR | HP APR | |:---------|:-------:|:------:| | Manufacturer promo | 0-3.9% | 3.9-5.9% | | Standard (good credit) | 4.9-9.9% | 6.9-11.9% | | Poor credit | 9.9-19.9% | 11.9-24.9% |

Manufacturer-subsidised APR is very common on PCP deals in Ireland (VWFS, Toyota Finance, Bank of Ireland, AIB).

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When to Choose PCP in Ireland

PCP suits you if:

1. You change your car every 3 years — The most common Irish ownership cycle
2. You want lower monthly payments — PCP payments are typically 40-50% lower than HP
3. You drive under 20,000 km/year — Avoid excess mileage charges
4. 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:

1. You plan to keep the car for 5+ years
2. You drive over 20,000 km/year — No mileage penalties
3. You want to own the car outright — No balloon payment to worry about
4. You're buying a used car — HP is more widely available for older cars

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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 | |

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Frequently Asked Questions