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Car Leasing vs. Personal Contract Purchase - Key Differences

Car Leasing vs. Personal Contract Purchase - Key Differences
"""So, you need a car. Maybe it's to get to work, complete your tasks, or get the kids to school on time in the morning. Regardless of the reason, you are certain that you need a car. Ideal; proceed to a garage and... Wait. PCP versus leasing? What is the distinction?

Sadly, the answer is quite a lot. Everything about a PCP agreement differs from a leasing agreement, from the payment structure to the disposition of the vehicle at the end of the contract.

What occurs when the agreement expires?

With a PCP

Personal Contract Purchase (PCP) is essentially a form of rent-to-own. What is the meaning of that? The finance company retains ownership of the vehicle until all payments have been made. You are still the registered owner, but the finance company owns the vehicle.

After making all of your payments, you have several options:

Need another vehicle? Simply return it to the finance company with no additional fees.

Want to keep the automobile? You can fulfill the terms of your agreement by paying the remaining balance on the vehicle.

Want a different car? Part exchange it. Depending on the car's value, you may be able to cover the deposit on a second vehicle.

Within a Lease

Leasing is simply renting a vehicle for a specified time period. Therefore, your final option is to return the vehicle. Thankfully, leasing companies will frequently pick up your vehicle on a predetermined date and, if you so choose, drop off a replacement vehicle.

Do you pay a deposit?

With a PCP

Yes. Frequently, you can pay as much or as little as you'd like, which affects your month-to-month costs.

Within a Lease

No. However, you will be required to make a ""initial payment."" Typically, this is a 1, 3, 6, or 9-month advance payment. As with a PCP, the larger the down payment, the lower the monthly payments.

Can you alter your opinion?

With a PCP

PCP agreements are more flexible than lease agreements and frequently permit you to:

Change your vehicle if, for example, you need more seats for an upcoming family addition.

Increase the number of miles driven annually

Depending on your contract and circumstances, these modifications may or may not incur a fee. When researching PCPs, you should always read the terms of your contract carefully. Note, however, that if you wish to cancel your PCP, you will typically be required to pay the remaining balance.

Within a Lease

If you wish to make a change, such as switching vehicles, leases offer much less flexibility. Typically, your only option is to cancel your contract and pay any outstanding fees. However, some leasing companies simply charge a cancellation fee.

Exist any additional expenses?

With a PCP

A PCP still requires insurance, so factor that in. You must also account for the fact that VAT is added to your PCP prices. In addition, the majority of PCP providers offer maintenance packages for an additional monthly fee that cover any mechanical issues you may encounter.

Within a Lease

Generally, leases are less expensive than PCPs because leasing companies can recoup VAT on their vehicles. Consequently, no VAT is due on your end. You will still be required to insure your vehicle, and, similar to a PCP, an optional maintenance package will be available."""
 

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"Car Leasing vs. Personal Contract Purchase - Key Differences" was written by Mark under the Finance category. It has been read 86 times and generated 0 comments. The article was created on and updated on 14 January 2023.
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