Investing in a car purchase can be very puzzling affair and if you don’t understand the choices you have in the market then you might end up frittering your money on something that is not right for you. However, sometimes it can be very hard to understand what all the options mean and what the confusing jargons stand for.

The main kinds are Personal Contract Purchase (PCP), Personal Contract Hire (PCH) and Hire purchase. If you have a business then Contract hire and Contract purchase are the two options that are offered in the market, these choices are not very much different from the personal versions. May be you won’t be able to get a clear idea when you first look at these terms but they are not very complex to understand.

Personal Contract Purchase includes making regular monthly payments against the depreciation value of the vehicle; this means you have to pay a certain amount every month for the decrease in value of the car after the passage of time and usage. When your contract finishes, you will be given an opportunity to buy that vehicle at a pre-decided Guaranteed Future Value (GFV).

Then again, if you no longer need the car, you can just return it to be re-sold. PCP contract allows you to drive a car for a set period of time whilst making low payments and postpone the purchasing decision until the contract reaches to an end. Be watchful as the car remains the property of the finance company until the end of the contract.

In Personal Contract hire, which is a rather simpler version and it only includes a monthly payment in return of using the car, until the contract reaches to an end. Once you have reached to the end of the contract then the car is returned and the option of buying that car is not usually offered. Do not forget that throughout the time of contract, the car remains the property of the car financing company.

Hire Purchase is the combination of the two contracts mentioned above. You will make monthly payments for the car which will permit you to use it and at the end of the contract you will become the owner of the car. In Hire Purchase contract, the monthly payments are higher than PCP or PCH versions.

These are only the main types, and many changes are possible. With so many options available to you, it’s good to do your research on what’s offered to you. If you wish you can also discuss your finance options with your car dealer. They should be well experienced to advise you.

If you are in charge of a business fleet and looking for reliable business contract hire? Then Auto Plan is the perfect solution for it. We offer competitively priced contract hire for our diverse range of cars. For more details, please visit our website.