What is the Difference Between PCP vs HP vs Leasing

When deciding between PCP, HP and Leasing, consider your driving habits, your financial situation and how often you would like to change your car. Each option has its pros and cons so the decision depends on your own preferences.

We will guide you through each option and help you choose the best method for purchasing your next car. If you have any questions, contact our team here at Carsa today and have all your questions answered.

Personal Contract Purchase (PCP)

PCP is a flexible financing option that has gained popularity among drivers who wish to change their cars every few years without the hassle of selling the vehicle. Here's how it works:

Deposit: You start with a deposit, typically around 10% of the car's value.

Monthly Payments: You make lower monthly payments over the term of the agreement, which usually lasts between 24 to 48 months. These payments cover the depreciation of the car, not its entire value, making them lower than other financing options.

Balloon Payment (Optional Final Payment): At the end of the term, you have three choices:

Return the car to the dealer with no extra charges, assuming it meets the agreed mileage and condition terms.

Pay the final balloon payment to own the car outright.

Trade the car in and start a new PCP deal on a new vehicle.

Pros:

Flexibility at the end of the agreement.
Lower monthly payments.
Option to drive a new car every few years.

Cons:

Mileage limits with penalties for exceeding them.
You don’t own the car unless you pay the balloon payment.

Hire Purchase (HP)

Hire Purchase is a straightforward path to ownership, with no balloon payment at the end of your contract.

Deposit: Similar to PCP, you typically start with a deposit.

Monthly Payments: You pay off the value of the car in monthly instalments over a fixed period (usually 12 to 60 months). These payments are higher than PCP because you're paying off the entire value ofthe car. Once the final instalment is paid, the car becomes yours.

Interest Rates: Interest rates for HP can be higher or lower depending on the credit rating of the borrower, but the total amount paid by the end of the agreement is clear from the start.

Pros:

Straightforward path to ownership.
No mileage restrictions.
The car is yours after the last payment.

Cons:

Higher monthly payments compared to PCP.
You are committed until the final payment is made.

Personal Contract Hire (PCH) - Leasing

Leasing, or Personal Contract Hire (PCH), is essentially a long-term rental agreement offering the use of a car for a set period of time at a fixed monthly cost. It's becoming a popular choice for individuals who prefer not to worry about the depreciation or the sale of the car later on.

Initial Rental: An upfront payment is required, often equivalent to three to six months of the monthly rental amount.

Monthly Rentals: Payments are made over the lease term, which can range from 24 to 48 months. These payments can be lower than those for PCP or HP, as you are only paying for the depreciation of the car during the lease period.

Return the Car: At the end of the lease, the car is returned to the leasing company. There is no option to buy the car.

Pros:

No worries about depreciation or selling the car.
Often includes road tax and breakdown cover.
Allows driving a new car every few years without a large upfront cost.

Cons:

You never own the car.
Mileage limits with excess charges if exceeded.
Early termination can be costly.

Which Option is Right for You?

PCP is an ideal option for those who like changing their car often, without the commitment of having to worry about all that comes with selling it.

HP is perfect for drivers who want to own the car at the end of the contract without any mileage concerns.

Leasing (PCH) works well for those who like to change their car every few years, and don’t want to deal with the depreciation and selling the car.

PCP, HP and Leasing from Carsa

At Carsa we proudly offer a range of financing solutions, including Personal Contract Purchase (PCP), Hire Purchase (HP), and leasing, ensuring that you canfind the perfect financing solution for your vehicle.

Use Carsa’s free finance eligibility checker today and find out in minutes if you're eligible for our competitive finance options.

Worry-Free Warranty for All Carsas Vehicles

Every used vehicle purchased at Carsa comes with a comprehensive 3-month warranty, providing peace of mind and assurance in the quality and reliability of your new car.

For those seeking additional protection, Carsa offers an optional Platinum Maintenance and Repair Warranty, which covers your vehicle for up to the next 4 years. This extended warranty is designed to provide maximum coverage and convenience, keeping your vehicle in perfect condition without the worry of unexpected repair costs.

If you want to learn more, visit our website or contact our team today. Let us help you find your perfect car .