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Car Leasing vs. PCP: The Major Differenc

Car Leasing vs. PCP: The Major Differenc
"""So you require a vehicle. To get to work, complete some task, or simply get the kids off to school on time in the morning may be the reason. Whatever the cause, you just instinctively know that you require a vehicle. Just go to a garage and do it, perfect. Wait. A PCP or a lease? What's the distinction?

Sadly, the answer is quite a bit. Under a PCP, as opposed to a leasing agreement, everything from the way your payments are structured to what happens to your automobile at the end of your term is different.

What happens when the agreement expires?

With a PCP

In essence, a PCP (Personal Contract Purchase) is a type of hire purchase. How do we interpret that? Well, until all payments have been made, the finance company retains ownership of the vehicle. Although the lending company now owns the vehicle, you are still listed as the registered keeper.

Once all of your payments have been made, you have a few choices:

Need a new vehicle? Simply return it to the lending company without any additional expenses.

Wish to keep the vehicle? You can fulfil your end of the bargain by paying the car's remaining worth, as specified in your contract.

Need a different vehicle? It's being traded in. Depending on the value of the vehicle, you might be able to pay the down payment for a different vehicle.

Under a Lease

Simply put, renting an automobile out for a predetermined time is leasing. So, ultimately, returning the car is your only choice. Fortunately, leasing firms frequently come and take up your automobile on a scheduled date and, if you choose, even deliver a new one to you.

You make a deposit, right?

With a PCP

Yes. Frequently, you have the option of paying as much or as little as you'd like, which will have an impact on your monthly payment.

Under a Lease

No. However, you will have to make a ""initial payment."" Typically, this upfront payment is made over 1, 3, or 9 months. Then, exactly like with a PCP, you will make monthly payments. The bigger the initial payment you select, the lower the monthly instalments will be.

Can you rethink your decision?

With a PCP

Compared to leases, PCP agreements are more flexible and frequently let you:

If you need more seats, for example, for a future family addition, you should change your vehicle.

Increase the number of miles annually.

These modifications could cost money or they could be free, depending on your contract and the circumstances. Always make sure to carefully study your contract's terms while looking into PCPs. But keep in mind that you usually have to pay for the entire contract if you want to cancel your PCP.

Under a Lease

If you wish to make a change, like switching vehicles, leases give much less flexibility. Normally, your sole choice is to end your contract and pay any outstanding fees. Some leasing firms, however, just demand a fee for cancellation.

Are there any other fees?

With a PCP

Be sure to account for the fact that a PCP still needs insurance. Additionally, keep in mind that your quoted PCP rates do not include VAT. For an additional monthly price, the majority of PCP providers also provide maintenance packages, which will take care of any mechanical problems you might experience.

Under a Lease

Due in significant part to the loan company's ability to claim VAT back on its vehicles, leases frequently cost less than PCP agreements. As a result, you won't have to pay any VAT. However, just like a PCP, there will be an optional maintenance package that you can choose to purchase if you still need to insure your vehicle."""
 

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"Car Leasing vs. PCP: The Major Differenc" was written by Mary under the Finance / Wealth category. It has been read 28 times and generated 0 comments. The article was created on and updated on 13 January 2023.
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