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PCP vs Lease: Everything You Need to Know

Getting a new car can be intimidating as you have many choices, but it doesn't have to be. In this guide, we’ll break down the differences between Personal Contract Purchase (PCP) and car leases so that you can make an informed decision about which option is best for you. 

We'll cover everything you need to know, so you can feel confident about your decision before signing any paperwork. 

What Is PCP?

A personal contract purchase, or PCP, is a type of car finance that gives you the option to buy the car at the end of the agreement. With a PCP, you pay an initial deposit followed by monthly payments for an agreed period. 

At the end of the PCP, you then have three options:

  1.  Pay a final "balloon" payment to own the car outright
  2.  Return the vehicle to the dealership
  3.  Trade in the car for a new one. 

PCPs can be a great way to finance a new car, as they offer lower monthly payments than other types of finance. However, it's important to be aware that you may end up paying more with a PCP than with different types of finance if you choose to own the car at the end of the agreement.

What Is Leasing?

Car leasing is a popular alternative to buying or financing a vehicle. When you lease a car, you agree to make monthly payments for a set period. You get to drive the car during that time, and at the end of the lease, you return it and lease a new one. 

Many people like leasing because it allows them to drive a brand-new car without making a long-term commitment. Plus, leases typically have lower monthly payments than other options. 

There are some downsides to leasing. You may be charged for excess mileage or wear and tear on the vehicle. Before signing on the dotted line, ensure you understand your lease agreement's terms and conditions.

PCP vs Leasing: Which Is Better? 

When it comes to car financing, there are several options to choose from, but the most popular choices are leasing and PCP. Both options have advantages and disadvantages, so it's essential to understand how they work before deciding. Here's a quick overview of the similarities and differences between leasing and PCP.

Leasing and PCP both involve making monthly payments over a set period. With leasing, you're essentially renting the car for the duration of the lease, while with PCP, you're paying off the vehicle's value in instalments. At the end of a lease, you simply hand the car back to the dealership, whereas, with PCP, you can buy the car outright or trade it in for a new vehicle.

One of the main advantages of leasing is that it can be considerably cheaper than buying a car outright. This is because you're only paying for a portion of the vehicle's value throughout the lease. PCP can also be cheaper than buying outright, as you often get a lower interest rate on your finance agreement.

If you’re unsure whether to choose PCP or a lease, you should consider: 

  • Do you want to buy the vehicle at the end of the contract?
  • What is your budget for your new car? 
  • Do you want to drive a new car every few years? 

By answering these questions, you should be able to determine the better option for your circumstances. 

Tilsun Leasing has a vast selection of personal car leasing deals suitable for all types of drivers. If you have questions about car leasing, contact the Tilsun Leasing team today by calling 03330 040 888 or emailing [email protected].

Novuna Vehicle Solutions
Lex Autolease
Leasing Broker Federation

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