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Flexible car financing with Bellinger Subaru

Making the decision to buy a new or used car is generally not one that can be taken lightly. However, thanks to the availability of Personal Contract Purchase and Hire Purchase finance solutions, ownership is more viable than you might think.

Here at Bellinger Subaru, we provide both options. Let’s take a look at the benefits offered by each…

What is Personal Contract Purchase (PCP)?

It’s estimated that four in five new cars on UK roads are financed by PCP.

As with Hire Purchase (HP) financing, PCP requires a deposit, followed by fixed monthly payments. However, unlike HP, these monthly instalments pay off the vehicle’s anticipated depreciation. It’s the larger final ‘balloon’ payment that secures the car.

Alternatively, if you choose not to pay the final instalment, you can hand the vehicle back and walk away with no more money to pay. Essentially, you will have leased the car.

Or, you can choose to begin a new PCP plan – and select a brand-new Subaru.

How does PCP actually work?​


When you have chosen your vehicle, you will then agree your annual mileage and decide on the agreement term with one of our Retail Managers.

We will then determine the Guaranteed Minimum Future Value (GMFV) of the vehicle at the end of the agreement and work out a deposit and monthly amount that works for you.

At the end of your agreement you will then have three options:

Return – Simply return the vehicle the back to the finance company 
Retain – Keep the car by paying the optional final payment
Renew – Trade it in for another car

For a quotation, help, or advice contact us and ask to speak to one of our Retail Managers.

What are the advantages of PCP?

  • Monthly payments on a vehicle financed by PCP are usually lower than if your vehicle is financed by a Hire Purchase agreement.
  • If you decide not to buy the vehicle, you can simply walk away when you've made all the payments.
  • Similar to PCH, you can drive away a new or used vehicle every few years (dependent on the chosen term) without worrying about selling it on.
  • If your vehicle is worth more than the Guaranteed Future Value then you can use that equity towards a deposit on a new vehicle.

What should you consider when option for a PCP?

  • If you want to buy the vehicle you will need to pay your final balloon payment (the Guaranteed Future Value).
  • Similar to PCH, you will need to agree on a mileage allowance at the beginning of your contract and there may be excess mileage charges if you exceed this.
  • You won’t be able to sell the vehicle without settling the finance.
  • You won’t own the vehicle until you have made all of your repayments.
  • You’ll need to keep the vehicle properly insured, maintained and in your possession until the full value is paid off.

Can I settle my PCP agreement early?


You can normally settle your agreement early by asking the finance company to provide you with a settlement figure. However, the finance company will require you to pay off the difference between what your vehicle is worth and what you still owe. There may be a difference which is known as negative equity. On the other hand, you may find that at the end of your term your vehicle is worth more than the Guaranteed Future Value, which means you will have some positive equity to contribute towards your next vehicle.

What is Hire Purchase (HP)?

HP is often the finance solution of choice for those motorists who are intent on full ownership from the start. While requiring a deposit and fixed monthly payments (as with PCP), the latter tends to be lower with HP because monthly instalments incrementally pay off the value of the car. Also, unlike PCP, there’s no large final instalment, simply a final payment which is the same value as all previous monthly payments.

What are the advantages of HP?

  • You’ll be able to drive away a vehicle that you may not have managed to buy outright.
  • Unlike a PCP or PCH contract, you won't need to estimate your mileage at the start of your Hire Purchase agreement, so you'll avoid excess mileage charges.
  • Once you’ve made your final monthly payment, including the option to purchase fee, you'll have full ownership of the vehicle.

What should you consider when opting for HP?

  • Monthly payments may be higher than some other finance options, such as PCP, as you're paying off the full value of the vehicle.
  • You won’t be able to sell the vehicle without settling the finance.
  • You won’t own the vehicle until you have made all of your repayments.
  • You’ll need to keep the vehicle properly insured, maintained and in your possession until the full value is paid off.

Can I settle my HP agreement early?


The short answer is yes, you can end your finance early. There are different provisions within each finance agreement that allow you to do just that. If you have paid two-thirds or more of your finance agreement, the options to end the finance agreement early open up.

For a Hire Purchase agreement, there is an option of paying it off early through a settlement fee. A settlement fee covers the cost of any remaining unpaid instalments and interest payments remaining on the agreement. Once the settlement fee is paid, you take full ownership of the vehicle early.

Under a Personal Contract Purchase agreement, you can also pay a settlement fee for bringing the agreement to an end early. After that, you can choose to hand the vehicle back or you have a second option. Through a PCP agreement, you can take full ownership of the vehicle by paying off the remaining Guaranteed Minimum Future Value also known as a balloon payment.

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