What is the primary difference in ownership at the end of an HP (Hire Purchase) agreement versus a PCP (Personal Contract Purchase)?

• A. HP transfers ownership to the borrower after all payments are made.
• B. PCP automatically transfers ownership at the end of the term.
• C. HP never transfers ownership.
• D. PCP never transfers ownership immediately at signing.

Answer: (A)

The main idea is when ownership passes to the borrower. In a Hire Purchase, you pay for the car in installments and ownership transfers to you once the final payment is made. There isn’t a separate step to take to own it later—the act of completing all payments completes ownership transfer.

In a Personal Contract Purchase, you don’t automatically own the car at the end. You have an option to buy it by paying a final balloon amount, but you can also choose to return the car or swap it for another vehicle. So ownership isn’t automatic at the end of the term.

Therefore, the statement that accurately captures the primary difference is that ownership is transferred on HP after all payments are made.