You’ve probably wondered what are your buying a car for Uber option if you don’t want to pay for it outright. Many drivers in the UK go for car finance, a type of agreement where you borrow money to buy the car and pay back your debt, plus interest, in fixed monthly instalments over a set period. There are several types of car finance agreements varying in costs and conditions, with Hire Purchase and Personal Contract Purchase being the most common. 

Another option, more flexible than car finance, is rent-to-buy. With this type of subscription, you pay a weekly fee for a contractually agreed period, after which you own the car without a big balloon payment required.  

To decide which option suits you best, it’s important to know the differences between these agreements, their costs and conditions.  

What is HP car finance?

Hire Purchase (HP) is a way to pay for your car while you use it. Rather than paying the entire car price upfront, you put up a deposit and borrow the rest. To repay the loan, you agree to fixed monthly repayments over a set period plus an interest rate.

The amount you pay each month depends on the size of the deposit and length of your contract, plus any interest charged and additional fees. 

The HP contract can last between 12 months and five years, the most common being three to four years. You don’t technically own the vehicle during the contract time, even if you use it. You’re registered as the car’s keeper, and the finance company is the legal owner of your car until you’ve paid the Hire Purchase loan off. By the end of the contract, you legally become the car owner after paying the full amount back.  

How much does HP car finance cost?

If you want to buy a £37,000 car on a four-year HP contract and pay a £3,000 deposit upfront, you’ll need a loan for the remaining £34,000. At an annual 12% interest rate, you have to pay around £900 each month for four years, without any additional charges that might be included in your contract.  

Although HP agreements don’t usually include a balloon fee at the end of the contract to legally own your car, there are some HP agreements with an ‘Option to purchase’ fee stipulated in the contract. This fee is generally between £100 to £200, but make sure to check your contract and understand all the fees, terms and conditions before you sign up.  

IMPORTANT: The HP car finance agreement doesn’t cover any car running costs. As the car’s registered keeper, you’re in charge of insurance, servicing and maintenance. 

Can HP car finance be paid off early?

Yes. However, depending on your contract, you must meet some conditions before ending your HP contract early. One of the conditions is paying back at least 50% of the total finance amount (plus interest) before you can end the contract. Then, you just have to pay outright the rest of the amount and you become the legal owner of the car.  

What is PCP car finance?

Personal Contract Purchase (PCP) is quite similar to HP — you put down a deposit, take out a loan for the remaining amount, a loan you pay back in monthly payments plus interest. However, the main difference between HP and PCP is that with PCP, you don’t pay the full car price in instalments.

You pay off the amount the finance lender predicts the car will lose in value over the length of the contract instead, minus your deposit.

This is called the minimum guaranteed future value (MGFV). The MGFV varies between cars, engine sizes and trim levels.  

Another significant difference is the way your loan is distributed in monthly payments. While for HP, you pay the full amount in equal monthly installers, for PCP, you pay smaller amounts each month and a large amount of your loan at the end of your contract. This is called a ‘balloon payment’, mandatory if you want to own the car. The contract usually lasts for 24 to 48 months. 

What happens at the end of PCP car finance contract?

When your PCP contract ends, you can choose either to pay the balloon payment and own the car or to return the car and start a new PCP contract for a new car. If your car is worth more than what you’ve already paid by the end of the contract, you use the difference between your final payment and its actual market value as a deposit on another PCP contract car.  

How much does PCP car finance cost?

Say you want to start a four-year PCP contract for a car worth £37,000. If you put in a £3,000 deposit, you need a loan for the remaining £34,000. The car is estimated to be worth £16,000 at the end of the contract, so you’ll need to pay £18,000 in 48 monthly instalments, plus interest or additional charges. That’s around £650 per month, calculated at a 12% APR. At the end of the contract, you’ll have to pay the car’s value by that moment, £16,000, if you want to buy the car.  

IMPORTANT: Similar to HP, since you’re the car’s keeper, you’re in charge of insurance, car maintenance or repair costs.

PCP contracts also include monthly mileage limits you have to stick to or pay an excess mileage fee otherwise, which can prove quite expensive.  

What is car subscription?

With a rent-to-buy subscription plan, you pay a weekly subscription to drive a car that becomes yours at the end of your agreement.  

With Splend’s Flexi own plan, you don’t have to apply for a loan as with car finance since you pay your subscription one week in advance. That’s why you can apply for Flexi own, even with a bad credit score. Depending on the car you choose, there are four and five-year agreements available. At the end of the contract, you become the owner of the car.  

Splend’s Flexi own is a plan tailored for on-demand drivers’ needs and covers everything required to get on the road — PHV insurance, car maintenance and regular servicing, PHV licence, car tax and MOT, plus 24/7 roadside assistance and replacement car in case of an accident.  

Our team consists of PCO car subscription specialists who provide the training and support Uber drivers need to make their careers more profitable and successful.  

How much does car subscription cost?

This amount will depend on the weekly cost of your rent-to-buy plan. 

To get started with our Flexi own plan, you need to pay a one-off set up fee to cover the costs of shipping your car and its paperwork, a collection day fee for the remainder of the week you decide to pick up the car on, as well as the full subscription for the next week.     

Let’s walk through the startup costs in an example. Say, you sign up for the Flexi own plan for a £249/week Volkswagen ID.3 and pick it up on Friday. You will pay a total of £654.50 when you collect your car — the £299 set up fee, the collection day fee and the next week’s subscription fee.  

Starting the second week, you’ll just have to pay the £249 subscription fee plus any additional charges. These may include your excess mileage fees or any late fees in case you miss a payment.  

For Splend Flexi own, these fees amount to £2 for every 10 miles above your 1000-mile weekly allowance – rounded to the nearest 10 – and go towards your car payment. Therefore, the more you drive, the sooner you own the car. 

HP vs PCP car finance vs car subscription – which one is right for me?

If you’re a PCO driver who wants to buy a car and use it only for ridesharing, a car subscription plan is definitely the best choice in the long run.

Our all-inclusive Flexi own plan covers everything PCO drivers need to go on the road, saving you time and money.

Although the monthly payments might be bigger compared to car finance, when you add up all the other car expenses you must cover, you realise how much you can save with car subscription.  

But don’t take our word for it. Below is a data-based example for the Volkswagen ID.3, which shows you how much you can save weekly with Flexi own, compared to PCP and HP, and also by the end of your term contract, usually four years. We considered a near-prime credit rating and a 12% APR. 

Estimated weekly savings

This table uses estimates, please do your own research before making any decisions.

Estimated savings at the end of the contract (4 years) 

This table uses estimates, please do your own research before making any decisions.
*Including the £16,000 balloon payment 
**Servicing and maintenance are calculated for a yearly 52,000 mileage

About Splend

We enable people to make money by driving. Our vision is a future where every on-demand driver can be successful.

We are car subscription specialists. Don’t take our word for it—drivers rate us excellent on Trustpilot. We can set you up with a brand-new or new-model car on our Flexi own plan, plus we provide the training and support you need to become an Uber driver that’s more profitable, safer, and fulfilled.

Drop by our London Hub at 393 Edgware Road Cricklewood, London, email us, or say hello on 0333 016 4331