Car leasing vs PCP – Which is good?

Car Leasing

Whether you lease a car through a Personal Contract Hire (PCH) agreement or finance your next vehicle through a Personal Contract Purchase (PCP) agreement, you can benefit from reduced monthly payments compared to the car’s worth. Both alternatives are suitable for people who intend to return the car after the contract and replace it with another.

Despite their similarities, these two methods of getting into a car have considerable differences. PCH leasing agreements, for example, are usually only offered on brand new cars, so you won’t be able to take advantage of the much-reduced pricing of almost all new and used cars. PCP, on the other hand, allows you to finance both new and used cars, with used cars offering even cheaper monthly payments how to buy a used car on finance.

What is Car leasing?

Car leasing is leasing a vehicle for some fixed time at an agreed price. Though buying and leasing is often a tough decision. On the other hand, buying involves higher monthly costs. But a lease has lower monthly payments.

What is PCP?

With a PCP agreement, you must return the vehicle at the end of the contract term; you have greater flexibility. With PCP, you can return the car after the contract, but you can also buy it by making the big, pre-agreed optional final payment.

PCP allows us to easily trade in your car for a new model, particularly enticing if the vehicle is worth more than the final payment. If the vehicle is worth more than the outstanding finance balance, you can use the difference, known as equity, to contribute toward a new car deposit. The more equity you have, the lower your monthly payments on your next vehicle.

Furthermore, it is far easier to stop a PCP contract early than to end a lease contract – which you may want to do if your situation changes and you can no longer afford the monthly payments or if you require a larger car, for example. So, before you sign the papers, consider how essential flexibility is to you.

Difference between car leasing and PCP

Leasing a car

  • Usually only available on new cars,
  •  it works as a long-term rental agreement
  • It requires a decent credit score.
  • Excess mileage and damage fees apply.
  • A deposit is required at the time of rental.
  • Payments are quite low on a monthly basis.
  • At the end of the agreement, car must be returned.
  • Early termination of a contract is difficult and costly.

PCP financing 

  • Available for both new and used cars
  • Interest is a part of the finance agreement.
  • Poor credit scores are considered.
  • There may be mileage and damage costs.
  • A no-deposit option is frequently available.
  • Payments are quite low on a monthly basis.
  • At lease’s end, you can return, buy, or trade in the car.
  • Can be terminated early – usually at a fee.


In the end, have you known about car leasing and PCP finance? Make an intelligent decision and save money on monthly payments.

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