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What is Conditional Sale

Conditional Sale finance is a hire agreement where you will automatically own the car when the agreement ends. The loan period is fixed – normally around 2 or 4 years – and the finance agreement is secured against the car you are buying which allows greater flexibility in the terms and conditions that can be offered.

While you are hiring the vehicle the finance company is the legal owner but you are the "registered keeper" of the vehicle and responsible for insuring it and keeping it serviced.

What is PCP

A Personal Contract Purchase (PCP) agreement has some similarities with a Conditional Sale agreement, with the main difference being you are under no obligation to purchase the vehicle. The future value of the car at the contract expiry date is calculated at the start of the agreement and this value is deferred, meaning your monthly payments will be lower than someone on a Conditional Sale agreement of otherwise equivalent terms.

Once the hire period ends you can either return the car and enter into a new finance agreement for a new car or you can purchase the car, paying the remaining value that was deferred at the beginning of the contract.