PCH vs PCP
Car Finance Options
So, you’ve got your eye on a brand new Audi A1 Sportback, but you’re not sure which car leasing finance option to go for.
Both options offer a factory fresh, brand new car with flexible contract terms and affordable monthly payments, but which is best for you?
The main difference? Ownership. But is ownership overrated?
What is PCH and PCP?
Let’s start with the basics. Are you ready for a mini finance lesson? We love talking all things finance so here goes…
Simply put, personal contract hire is a long term rental option where you can benefit from low monthly payments, you just hand the keys back at the end of the lease. You never own the car.
PCP (personal contract purchase) gives you the option to buy the vehicle via a one-off balloon payment at the end of the contract or, like PCH, you can hand the keys back and start the process of picking your glistening new motor.
PCH vs PCP – Cost
Let’s break down the expenses involved.
Both options offer manageable and predictable fixed monthly payments, but PCH can work out slightly cheaper for you in the long run as PCP options often require a larger initial deposit and interest rates tend to be lower. One key difference to point out is that with PCH there’s no interest to pay for using the car. Your PCP finance payments would include interest as it’s effectively a loan.
When comparing the two, there’s a biggie to watch out for with PCP when it comes to cost.
Unlike, PCH where you can hand back the keys once your lease is up, the loan you take out with PCP doesn’t always cover the full cost of the car, leaving you with a balloon payment to shell out for should you wish to own the car when your contract ends.
Road Tax payments are included with PCH.
The right one for you will depend on your individual budget and on how much importance you put on owning your vehicle.
As an added bonus we also throw in free breakdown cover with the AA during your lease with us and who doesn’t like free stuff?
PCH vs PCP – Flexibility
Good news, both PCH and PCP offer maximum flexibility which means you get a car you like that sits well within your monthly budget.
Both come with mileage limitations, but as long as you stick to your allocated miles, you’ll have no issues and you are in charge of setting the limit. No major differences here.
Worth noting that if you need to change your mileage limit at any point during a lease with us we’ll work with you on that. We get that peoples circumstances change due to work and lifestyle so we’re more than happy to make sure your lease matches your needs throughout.
PCH vs PCP – Variety
Yeah yeah, we hear you, you’ve got the money bit, but does it change the cars you can pick?
Both finance options give you a wide range of models to choose from.
PCH usually comes out as the winner here by a hair’s breadth as you get unbridled access to the latest cars and models with the flexibility to swap it in for a newer model every few years with the added benefit of a slightly lower monthly payment.
Smiles all round.
PCP vs PCH – The final verdict
There’s a lot to weigh up and choosing between PCP and PCH should not be a snap decision. Cost, flexibility and variety should all be on your list of things to consider before you take the leap.
Ultimately, it comes down to your personal circumstances and requirements.
PCH (leasing) allows you to drive away your dream car with the added bonus of low monthly payments and no depreciation worries while side-stepping the stress of selling it on, but if you want to own your dream car one day, this option isn’t for you.
But ask yourself this, do you want the same car for a decade or do you want to trade it on for a shiny new set of wheels every 3 years?
If the latter appeals to you, you're looking for a PCH lease - and that's exactly what we offer at ZenAuto! Check out the shiny new wheels you could be driving soon on our Top Lease Deals page. Not sure what you're looking for? No worries! We've got an extensive list of articles covering the best car for your needs. You can also view our personal leasing info here.
Posted on: 3rd September 2020