So, you want a car. Perhaps it’s to go to work, maybe it’s to accomplish your work or maybe get the kids to varsity on time the next day. Whatever the reason, you recently know that a vehicle is what you will need. Perfect, just head over to a garage and… Wait. PCP or leasing? What’s the difference?
The answer, sadly, is rather a bit. Everything from the way in which your payments are structured as to the happens to your automobile at the end within your agreement are very different under a PCP than the usual leasing agreement.
What happens at the conclusion of the agreement?
On a PCP
A PCP (Personal Contract Purchase) is, effectively, a sort of hire purchase. What do we mean by that? Well, the ownership on the vehicle has been the finance company until all payments are actually made. You’re still the registered keeper, nevertheless the vehicle is of the finance company.
With all your instalments made, there is a few options:
Want another car? Simply hand it returning to the finance company, without the need of extra fees.
Want to maintain the car? You can settle your agreement by paying the remainder of the value on the vehicle, as presented in your agreement.
Want another car? Part exchange it. Depending within the value with the car, you may be able to cover the deposit on another car.
In a Lease
Leasing is just hiring an automobile for a few months. So, towards the end, your only choices are to give the automobile back. Thankfully, leasing companies will usually come and pick up your vehicle on a pre-arranged date, as well as drop another one off in your case, if you select.
Do you make payment for a deposit?
On a PCP
Yes. Often you can pay all the or as low as you’d like, which affects simply how much you’ll pay over a month-to-month basis.
In a Lease
No. You will must 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, as being a PCP, the greater the initial payment you select, the low the monthly installments will be.
Can you modify your mind?
On a PCP
PCP agreements tend to be flexible than their lease counterparts and infrequently allow you to:
Change your vehicle if, say, you may need more seats for the upcoming addition for the family.
Need to enhance the number of miles per year
Depending on your own contract and situation these changes might incur a fee, or they can be free. When investigating a PCP always ensure you read the relation to your contract closely. Do note however that in case you wish to cancel your PCP you are going to typically have to pay for up the entirety of the contract.
In a Lease
Leases offer a great deal less flexibility if you would like make a change like swapping vehicles. Typically, your only choices to cancel your agreement and pay any remaining payments. However, some leasing companies just charge a fee for cancelling.
Are there any extra costs?
On a PCP
Insurance is required with a PCP, so component that in. You’ll also must consider the fact that VAT is on top of your respective quoted PCP prices. Additionally, most PCP providers offer maintenance packages, a different monthly fee that will take care of any mechanical issues you might come up against.