So, you’ll need a car. Perhaps it’s to access work, maybe it’s to accomplish your work or maybe get the kids to high school on time each day. Whatever the reason, you only know that a vehicle is what you would like. Perfect, just check out a garage and… Wait. PCP or leasing? What’s the difference?
The answer, sadly, is very a bit. Everything from just how your payments are structured as to what happens to your car or truck at the end of the agreement are not the same under a PCP compared to a leasing agreement.
What happens after the agreement?
On a PCP
A PCP (Personal Contract Purchase) is, effectively, a variety of hire purchase. What do we mean by that? Well, the ownership in the vehicle is using the finance company until all payments are actually made. You’re still the registered keeper, however the vehicle is of the finance company.
With all your instalments made, you have a few options:
Want another car? Simply hand it to the finance company, without extra fees.
Want to hold the car? You can settle your agreement by paying the remainder value on the auto, as presented in your agreement.
Want some other car? Part exchange it. Depending within the value in the car, you may be able to cover the deposit on another car.In a Lease
Leasing is just hiring an automobile for a couple of days. So, right at the end, your only choices to give your vehicle back. Thankfully, leasing companies usually come and pick up your automobile on a pre-arranged date, and also drop a fresh one off available for you, if you ultimately choose.
Do you spend a deposit?
On a PCP
Yes. Often you can pay just as much or less than you’d like, which affects the amount you’ll pay over a month-to-month basis.
In a Lease
No. You will should front up an ‘initial payment’ however. This is usually a 1,3, 6, or 9-month up-front payment. Following that, you’ll pay a monthly sum and, similar to a PCP, the greater the initial payment you select, the reduced the monthly installments will be.
Can you alter your mind?
On a PCP
PCP agreements will be more flexible than their lease counterparts and sometimes allow you to:
Change your car or truck if, say, you will need more seats on an upcoming addition to your family.
Need to enhance the number of miles per yearDepending on the contract and situation these changes might incur a fee, or they may be free. When investigating a PCP always ensure you read the relation to its your contract closely. Do note however if you wish to cancel your PCP you are going to typically have to repay up the entirety of the contract.
In a Lease
Leases offer a great deal less flexibility if you need to make a change like swapping vehicles. Typically, your only choices are to cancel your agreement and pay any remaining payments. However, some leasing companies just charge a fee for cancelling.
Are there any other costs?
On a PCP
Insurance remains to be required with a PCP, so ingredient that in. You’ll also have to consider the fact that VAT is on top of your respective quoted PCP prices. Additionally, most PCP providers offer maintenance packages, an extra monthly fee that could take care of any mechanical issues you might come up against.
In a Lease
Leases are usually cheaper than PCP deals, largely since the finance company can claim VAT back on the vehicles. As such, no VAT is payable in your end either. You’ll still ought to insure your automobile though and, being a PCP, there’ll be an optional maintenance package if you need it.