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PCP or Lease?

pcp vs lease

When thinking about buying a new car, there are lots of things to consider.

There are the exciting parts like which model, what colour and choosing any optional extras, then there’s the not so exciting part – choosing how you’ll be paying for it. Buying a car is often our second most expensive bill after a mortgage, so ensuring you’re getting the best deal is key.

If you’ve looked at some of the UK’s most popular options, you will have come across PCP (Personal Contract Purchase) and Leasing (Personal Contract Hire).

Although you may have an idea about what they are from their names, they each have their own unique benefits, restrictions and disadvantages.

To learn more, read below and find out if you should get a PCP or Lease!

Which is the most popular car ownership option - PCP or Lease?

Recently, there has been a huge rise in the number of people deciding to lease their new car in the UK, and there are many perks that come with it.

Leasing your next car has many benefits and is the route more and more people are taking to get a brand-new car on their driveway. When you lease, you are essentially renting the car for a monthly cost, you’re still driving and enjoying exactly the same car, but for less money and with no long-term commitment attached.

Leasing deals generally last for around 2 or 3 years and provide people with more financial security, as there is no APR or hidden costs involved.

The Cost of PCP and Leasing

Another major benefit of leasing is that you don’t have to worry about depreciation. To quote billionaire J Paul Getty;

“If it appreciates, buy it. If it depreciates, lease it.”

We all know that new cars depreciate, it’s just one of those things, but because you’re leasing the car, this isn’t an issue that you will need to consider and you will be able to start a new contract for another brand-new car at the end of your lease period. All you need to do is hand the car back to the finance company at the end of the contract. Of course, there are terms and conditions that you’ll need to be mindful of on a PCP or lease, such as mileage and wear and tear, but this is also true of PCP agreements.

One of the worst things for most people is the hassle of selling or trading in your current vehicle. You are often left wondering if you’re getting the best value at the dealer and if you sell privately, no one wants to be spending their valuable time with ‘time wasting’ buyers at the weekend. When you lease a car, this process is erased, and you simply hand the car back to the finance company with no stress at all.

There is also no pressure to buy at the end of a lease agreement. PCP agreement often come with a “balloon payment” at that end of the agreement that is used to pay of the remainder of the finance. This can often be larger than the value of the car!

With leasing you can relax knowing that at the end of the contract, there are no additional costs to pay.

A real plus to leasing a car is that it often means you will be able to buy a more prestigious or better equipped car than you may have first thought, as leasing a car can be cheaper than a PCP, with lower monthly payments and fewer running costs.

As with a PCP, you are also covered by the manufactures warranty with a brand-new car, so although it is unlikely there will be any issues, it’s nice to have peace of mind that any issues would be sorted right away. Leasing also comes as a ‘package deal’ with things like road tax and annual services included in the monthly cost – so no extra costs along the way.

The Structure of PCP and Leasing


One of the most common ways to purchase a new car is with a Personal Contract Purchase (PCP) agreement, which spreads the cost of your car over a period of 3 to 5 years.

When purchasing a vehicle via a PCP, customers will pay a deposit for the car, which is usually a minimum of 10% of its value and make monthly payments until the end of the term. They then have 3 options available; they can make a ‘balloon payment’ that pays off the remainder of the balance, hand the car back to the dealer, or refinance the remainder of the balance, meaning you will own the car at the end of the term. Although not widespread, it is becoming increasingly popular for customers to be offered to buy their lease car after their contract has finished.

If you want to upgrade your car at the end of your initial term, you can use the resale value towards your next car, if your current car has depreciated less than expected.

With a PCP you will need to pass a credit check, and it’s a good idea to budget in advance, granted we can’t predict the future, but is it likely you will still be able to afford this monthly payment in 5 years’ time? Missing a payment can drastically effect your credit score and effect your ability to get credit in the future, so be sure that your 100% before you commit. The number of people choosing to purchase through a PCP has declined in recent years, as there are some negatives to consider. As it’s essentially a loan, make sure you check the terms and conditions and are aware of the APR rate you will be paying, as this is often not explained well by the dealers.


If you are someone who likes to drive a new car every few years then there are considerable benefits with a lease car that will save you money, time and hassle. Leasing also gives you more freedom when choosing your next car, as well as the possibility of driving a more premium brand or higher spec model. Everyone’s personal and financial situation is different, so it’s essential you do as much research as you can when deciding which route will be the most beneficial to your lifestyle. If you have any questions or would like more information about leasing a car, just get in touch and we will be happy to help.

We lease cars to individuals and businesses with both good and poor credit histories

Call one of our friendly leasing consultants today on 0300 124 0979 or talk to us via email at info@anycaronline.co.uk.

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31st of March 2020

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