Nowadays, you need to have a piece of in-depth knowledge & appropriate plan before acquiring a car, as it can be financially challenging. There are lots of options available for taking a car. Among them, leasing and Personal Contract Purchase (PCP) are the two most important ways. We discuss here for you, which will help you plan a car. We can say that PCP is comparatively a popular way of buying a car because they can be very flexible, but also some benefits of leasing a car will make you feel that, leasing is not at all a bad choice in comparison. So let’s dig into the discussion.
What do you mean by ‘PCP’?
This popular type of car finance is a high-purchase agreement of three to four years that require a deposit payment. So, here you’ll be asked to pay an initial deposit that will be followed by a monthly payment for a certain time. The thing here is the higher deposit you can afford, the lower your monthly payments will be.Have to keep in mind that at the end of this PCP agreement, you will have an option of making it your own fully.
What do you mean by leasing a car?
This is nothing but the long-term rental of a new car that often lasts between two or four years. Here you pay an initial deposit according to the lease agreement. This will be followed by fixed monthly installments for the remainder of the agreement. After the payment of all monthly rentals, you can hand over the car to the leasing company, if it is in good condition or, go for another lease deal for another new car.
The difference between PCP & Leasing a Car?
You have to go through three different factors to understand the difference. Let’s see.
- An option to buy the car at the end of the contract is only available in the case of PCP. In contrast with car leasing, you have to return the car at the end of the term with no option to pay to keep it. So before going for a lease agreement, remember that in the end you can only return the keys to the leasing company and walk away.
- For PCP, you will be responsible to cover the costs of maintenance and other repair expenses that could arise in between the scheduled timeline of the contract. While in the case of leasing, minor costs like routine servicing, and replacing tires will be there only.
- Suppose you are in such circumstances that you choose to terminate the contract immediately. For that PCP will fit your planning as this is easier to terminate a personal contract purchase than a lease agreement of a car. A termination fee will be charged for the Lease which is a setback for choosing that option.
The best option among PCP & Leasing a Car
As we conclude, we can say that each of them has pros & cons, providing an amazing option for getting behind the wheel of a new model. The differences are highlighted above so that you can go for the best-suited option for you.