On the face of it, car leasing and PCP (Personal Contract Purchase) are very similar to each other – you pay monthly instalments and use the vehicle as you would an owned vehicle, and don’t have ownership of the vehicle during the period. However, the key difference between car leasing and PCP is that with PCP you have the option of buying the vehicle at the end of the contract period. This usually means you have 3 options:
- Pay a lump sum final payment to own the vehicle
- Return the car with no further costs payable, subject to mileage and condition of the car when you hand it back
- Part-exchange the car.
This can work well in some cases in terms of having extra options, although bear in mind that leasing potentially has a number of advantages compared to PCP:
- Cost – according to recent research, 9 out of 10 cars are cheaper to lease than finance with a PCP over the same duration. Costs are also simpler than with PCP (for example, there are no interest payments with leasing) and there is less chance of unexpected payments being needed.
- New vehicles and vehicle changes – with leasing the vehicles are very often new and you can often swap to a different one if you need or want to, which allows for great flexibility.
- Depreciation – with leasing there’s no need to worry about depreciation, whereas you will need to factor this into your calculations with a PCP arrangement.
Ultimately, the type of car financing you choose will be dependent on your personal circumstances and what suits you best. If you’d like to find out more about car leasing, whether for business or personal use, or have any other questions for us, please feel free to give us a call on 0800 311 8290. If you’d prefer to contact us online, our contact information is located on this page.