Which is better, PCP, Financeor Contract Hire Leasing?

With PCP (Personal Contract Purchase) you will have the option to hand back your car at the end of your contract.

You can spread the cost across 24 to 60 monthly payments which can make getting a car more affordable.

For any reason you wish you can still return the car early through a voluntary termination if you’ve paid at least the 50% of the balance.

Things to consider before you choose PCP finance with most companies you’ll usually have to pay a deposit at the start of your PCP deal. However, with us you do not have to pay a deposit if you wish and you can spread this accross the monthly payments.

Be aware that you may have to pay damage charges and excess mileage fees if you hand the car back. It is best to get any major repairs done using your car insurance and you can avoid any extra charges.

Also with leasing a vehicle you can’t sell or modify your car until you’re the legal owner.

What is car leasing?

With Leasing (also known as Personal Contract Hire or PCH) is similar to PCP, as you’ll still be making monthly payments towards your car throughout your contract.PCP or BCH you more likely will have to give the car back at the end of the lease contact. Where with PCP you have the option to purchase the car at the end of the lease or just return it for another newer one.

If your lease contract requires an initial payment, you’ll start your contract by paying your chosen amount. This will be equivalent to your chosen number of monthly payments, usually ranging between three to 12 months.

Your initial payment will then be deducted from your total amount payable, meaning the amount left to cover your monthly payments is lower.

For example, if your monthly payments are £100 a month and you choose to cover three months with your initial payment, £300 will be deducted from your total amount payable.

Keep in mind at Time4leasing we also offer zero deposit up front payment deals. Contracts with no initial payment are available, so it will depend on what you choose.

You should also bear in mind that, unlike some deposits, an initial payment is not usually refundable.

With leasing, you won’t have the optional balloon payment at the end of your contract and will have to return your car to the lease company.

You’ll usually have your lease car for between two to four years, with the option to easily swap to a new model at the end of your contract.

Just like with PCP finance, there will be excess mileage charges and damage fees if you don’t stick to the guidelines of your contract.

At the start of your deal, your lease company will lay out what’s classed as fair wear and tear, and how many miles you can cover.

What type of finance is best for me?

The main benefits with leasinga car is that you can enjoy a car for a set period and swap it for a newer model easily when your contract ends.

The monthly payments can make choosing a newer car more affordable. We also offer schemes without initial payments.

Things to consider before you lease a car is that you'll usually have to make an initial payment at the beginning of your contract in place of a deposit.

Usually, there’ll be no option for you to buy and keep your lease car.

You could face extra fees for damages and excess mileage.

How are PCP and car leasing different?

The main difference between PCP and leasing is that leasing is a type of long-term rental, whereas PCP means you’ll have the option to buy.

Unlike PCP, you won’t usually pay interest on a lease deal as you’re not buying the vehicle. You will still have the added ‘money factor’ to pay on top of your lease price.

Most people choose to lease brand-new cars, but you can also lease used models as well. PCP car finance can also be used with either.

If you want to end a lease deal early, you’ll usually have to pay an early termination fee to be able to hand your car back.

With PCP finance, you can end your car finance early by settling the outstanding balance or choosing voluntary termination. By choosing termination, you’ll be able to hand back the car with no further payments if you’ve already paid at least 50% of the balance.

PCP also gives you the option of utilising any potential equity towards a new car. If your car is worth more than the optional final payment, you can trade in your car with your lender and use the equity towards the cost of a new one.

Is car leasing or PCP finance better?

There are positives and drawbacks to both PCP car finance and car leasing – the best option will depend on your individual circumstances.

One question to ask yourself is if you’re someone who likes to get the newest cars and swap them regularly, leasing is an easy way to do this.

PCP gives you more options at the end of your agreement, allowing you to choose whether to return the car or pay the final payment and keep it.

You’ll also have the option of trading your car in and using any potential equity towards a new one, whereas leasing requires you to start a fresh deal with a new initial payment with each new car.

PCP isn’t the only type of car finance that gives you the option to become the owner of a car – Hire Purchase (HP) and a personal loan might also be a good choice, specially if you have been rejected for leasing because you have poor or bad credit history or for other circumstances.

Do you have any Volvo XC60 hybrids available for business leasing? Can you give me an idea of cost & the wait time please?

Have you filled in a form that gives us permission to discuss financial matters with you? When you say business leasing do you mean Contract Hire? or PCP? has the business and or the director good credit score? Are you VAT registered? Have you a deposit to put down if asked? and how much?

It would be myself leasing through my business. It is not VAT registered as I deal with prescribed devices (Botox/fillers) which means I don’t pay VAT. It is a Ltd company with no credit faults etc. I personally have a good credit history & am a homeowner. I haven’t filled out a form, this is my first point of contact. I haven’t considered a deposit yet as I didn’t really know what finances were involved at this stage. Can you explain the different between the hire & the pcp please? Is it that the pcp has the option of the balloon payment at the end? If so, I’d probably go for the hire for now.

No worries about the VAT. You can still claim the entire cost of the lease as an expense. Contract Hire, you do not own the vehicle and you must return it. This is only for brand new cars and typically 3 to 9 up front monthly payments are required. With PCP it is more suited for used cars but also new. If used you do not always have to pay anything up front. There is an option to pay a balloon and keep the car r just hand it back and start all over again with a newer car. Is it a Volvo you want? or a good hybrid? would you consider used (normally a couple of years old car in excellent condition) may work out cheaper for you?

I’m keen on a hybrid yes, I do love the XC60 though! Definitely an SUV hybrid anyway. If you think there’s any of that same standard you can send them over too and I can check them out. I’m not necessarily overly fussed about it having to be brand new as long as I liked the car. If it gives me more options of vehicles but choice of pcp/hire then I’m open to suggestions. Thank you for being so prompt by the way, it’s been tricky narrowing things down & getting to the point of actually wanting to get one.

If you provide me with an email address and a contact number, need to know also if you are single or married, and do you have a UK driving license then I can track you for some quote proposals. Then we put you in touch directly with one of our suppliers so you can in turn evaluate the offers. I hope this helps?

I’m separated. Full UK drivers licence but why do you need my contact number? Need your contact number too please. We require this to prevent fraud. Protects you too. We do not spam our customers, promise.

No worries. I've emailed you my details.

By the way why are you looking for a Hybrid? How many miles per year will you be doing?

Just to be kind to the environment! I average 13K miles/year I think. Actually, I’d say 15K/year to play it on the safe side for allowance.

Best be safe than sorry. And by the way we are a drop in the ocean when you hear about how India and China pollute the world.

Every little helps as they say though!

Have you received our email?

I got one, I got a call from a guy too but he very kindly said he’d leave it to you from a target point of view so didn’t provide quotes.

 

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