Hire Purchase vs PCP — What’s the Difference and Which Can You Claim For?
Scheme status (updated 5 August 2026): parts of the FCA motor finance redress scheme are temporarily suspended while the Upper Tribunal considers legal challenges. Lenders do not currently have to calculate or pay compensation under the scheme, the original decision and payment dates no longer apply, and no payment under the scheme is guaranteed. If the scheme proceeds, first payments are expected in 2027 at the earliest. Any dates mentioned below were set before the suspension.
Both hire purchase (HP) and Personal Contract Purchase (PCP) are fully covered by the FCA’s PS26/3 motor finance redress scheme. If you are unsure which type of agreement you had — or whether it matters for your claim — this guide explains the key differences, how to identify which you had, and what it means for your compensation.
The Short Answer
Both HP and PCP are covered by PS26/3. The type of agreement does not affect your right to claim — what matters is that it was a regulated credit agreement arranged through a dealer or broker between 6 April 2007 and 1 November 2024, and that the dealer received an undisclosed commission. Average payout: £829 per eligible agreement whether HP or PCP, plus compensatory interest.
What Is Hire Purchase?
HP is a straightforward finance arrangement where you pay in fixed monthly instalments over an agreed term. At the end, once all payments are made, you own the car automatically. There is no optional balloon payment and no choice at the end — ownership transfers when your last payment clears. HP has no mileage restrictions and the interest rate is fixed throughout.
What Is PCP?
PCP keeps monthly payments low by deferring a large portion of the vehicle’s value to the end as an optional balloon payment (the Guaranteed Future Value). At the end of the agreement you have three choices: pay the balloon and own the car, hand the car back, or part-exchange into a new agreement. PCP typically has mileage restrictions. It is most commonly used for new cars where lower monthly payments are the priority.
How to Tell Which You Had
Check your original agreement documents — they will state ‘Hire Purchase’, ‘Conditional Sale’ or ‘Personal Contract Purchase’ at the top. The presence of a Guaranteed Future Value, Optional Final Payment or Balloon Payment figure confirms PCP. If you simply kept the car after the last monthly payment with no further payment, it was HP.
Your credit report from Experian, Equifax or TransUnion will also show the agreement type. Claims Bible can identify the type as part of our free agreement trace. See: Claiming Without Paperwork
Does the Agreement Type Affect My Payout?
Not significantly. The FCA’s Hybrid Remedy applies the same calculation to both — the average of your estimated interest overpayment and the commission paid to the dealer, plus compensatory interest. What affects the payout is the size of your loan, the interest rate charged, and the length of the agreement — not whether it was HP or PCP.
Estimate your specific payout: Car Finance Claims Calculator
What About Conditional Sale Agreements?
Conditional sale is a less common variant of HP where ownership transfers automatically at the end. It is treated identically to HP under PS26/3. See: Conditional Sale Car Finance Claims
Frequently Asked Questions
I’m not sure whether I had HP or PCP. Does it matter for my claim?
For eligibility — no. Both are covered. Find out which you had using your credit report or Claims Bible’s agreement finder, then proceed from there.
I had both HP and PCP at different times. Can I claim for both?
Yes. Each eligible agreement is a separate claim. See: Multiple Car Finance Agreements
Is PCP the same as leasing?
No. Leasing (Personal Contract Hire) is a rental arrangement with no option to own. Only PCP and HP are covered by the FCA scheme — leasing is excluded.
I had a 0% PCP deal. Can I claim?
Interest-free agreements are excluded. The scheme addresses cases where interest was charged at a rate inflated by dealer commission.
Related Guides
Hire Purchase Car Finance Claims
Conditional Sale Car Finance Claims
How Is My Compensation Calculated?
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Think You May Have a Motor Finance Claim?
The FCA estimates average compensation of around £830 per eligible agreement, but eligibility and payment amounts vary. Some customers may receive nothing. Complaints about agreements started from 1 April 2014 should be submitted by 30 June 2026 to be considered under the earlier timetable. Different dates apply to older agreements. The scheme is currently subject to legal challenge, so dates and payment timings may change.
