After paying a deposit - typically around 10% of the vehicle’s value - you’ll cover the depreciation value over a period of up to 48 months. The depreciation value is the difference between the sale price and the pre-agreed Guaranteed Minimum Future Value. At the end of the term, you will have the option of paying off this figure to become the full owner, or you can return the vehicle or trade it in for a new one.
PCP agreements are an affordable way to finance your MINI, as the monthly payments are often lower than on other purchase plans. There’s flexibility at the end of the contract too, enabling you to decide down the line whether you’d like to own the vehicle or choose a new one.
PCP contracts require you to estimate your annual mileage at the beginning of the agreement, and excess mileage is charged on a per mile basis. In addition, while you don’t own the vehicle during the agreement, you’re still responsible for maintenance, tax and insurance.
In order to settle your PCP agreement early, you’ll need to obtain a settlement figure, which is essentially the difference between what the car is worth and what you still owe. Settling early may therefore result in negative equity.
After making an initial deposit - usually 10% of the vehicle’s value - a Hire Purchase agreement requires you to pay off the value of the car with fixed monthly instalments, paid over a 12-60 month term. When the final payment has been made, you’ll be required to pay a one-off ‘Option to Purchase’ fee, which is typically around £100-£200. You’re then the car’s outright owner.
The biggest advantage of Hire Purchase is that you can own your chosen vehicle at the end of the agreement without the need for a large final payment. In addition, you won’t be restricted to a mileage allowance over the course of the agreement.
Since you are paying for the vehicle’s value as opposed to its depreciation cost, the monthly repayments for Hire Purchase are often more expensive than those for PCP or PCH contracts. It’s worth remembering that you are not the vehicle’s owner until the final payment is made, so you cannot sell it without settling your finance.
An HP agreement can be settled early by requesting a settlement figure from your finance provider. This figure includes the outstanding balance of the vehicle and interest.
After an upfront payment - usually of three months’ rental - you’ll pay fixed monthly instalments over a period of 24-60 months. Many providers offer the option of including a maintenance package to spread the cost of servicing, and when the agreement is over, you simply return the vehicle.
PCH is a hassle-free way to drive a vehicle you may not be able to afford to buy outright, and enables you to change your car every two to five years. Monthly payments are typically less than those made on Hire Purchase agreements.
At the beginning of a PCH contract, you’ll need to specify an annual mileage. Any extra miles covered over the term are charged on a per mile basis. Bear in mind that you won’t be the owner of the vehicle, nor will you have the option to purchase it. You will, however, still need to insure, tax and maintain it throughout the agreement.
A PCH contract can be cancelled early, but this is likely to incur charges.