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PCP vs PCH Advice Guide

Motor Mistress Leasing Advice

What are the benefits of PCP – why should you choose PCP over PCH?

PCP vs PCH, Personal Contract Purchase vs Personal Contract Hire

PCP vs PCH Advice Guide     

Personal Contract Purchase – commonly referred to as PCP – is getting more and more popular here in the UK. In fact, the latest FLA (Finance and Leasing association) figures show that in August 2013, PCP agreements were up by 54%, representing a massive £432m in the new car financing market.

In addition, PCP is also growing as a popular choice of funding for used cars – this sector has also recently grown in substantial numbers.

On the face of it, when you are comparing PCP to Personal Contract Hire (PCH), it may seem like there is little difference. After all, with both agreements, you can hand the car back at the end.

However, with the flexibility that PCP offers, it is well worth considering as a potential “win-win” finance option for your next car.

Let’s take a look at some of the key points that both PCP and PCH offer to the consumer and then compare PCP vs PCH overall.

Personal Contract Purchase – PCP Pros and Cons

PCP Pros

  • PCP gives you flexibility and the chance to benefit from the vehicle equity at the end of the contract term
  • PCP gives you a fixed monthly payment (like PCH) but at the end of the contract, you can pay a final end value (or balloon payment) and buy the car outright
  • If you do not want to buy the car, you don’t have to – you can hand it back
  • If your car is worth more than the pre-agreed end value figure, you can also sell it and keep the difference (or of course, you can use in in part exchange for your next vehicle)
  • You can opt to include a maintenance package as part your Personal Contract Plan
  • By opting for a PCP, you will often get a great price as your vehicle funder will usually have negotiated excellent terms with the supplying manufacturer and/or dealer

Personal Contract Hire – PCH Pros and Cons

PCH Pros

  • PCH also gives you a fixed monthly cost for the term agreed 
  • You can opt to include a maintenance package as part of your Personal Contract Hire agreement
  • You will usually be able to get a competitive monthly payment as your supplier will have secured favourable terms with the vehicle supplier on your behalf

PCH Cons

  • If your vehicle is returned over mileage or if it is in poor condition, you will be liable for charges from the funder
  • Unlike PCP, if this is the case, there will is no option to buy the vehicle at a favourable pre-negotiated end value figure to try and negate some of these costs

PCP vs PCH – Summary

Although I do always say that every case is different, usually PCP is a win-win situation as far as car finance is concerned.

If your vehicle is worth more at the end of the contract than the balloon payment (and in my experience, if you have adhered to the mileage, looked after your car and chosen a good specification / model, it usually is) then you are quids in. That has to be a bonus whatever way you look at it and by anyone’s standards, it is much better than handing it back for the finance company to sell it on at a profit.

In addition, you still get the fixed monthly payments that PCH offers and the chance to add maintenance into your contract if you are really set on hassle-free motoring.

PCP offers more flexibility than PCH and sometimes it can be a real no-brainer to choose this method of funding over the other.

The number of brokers that actually offer PCP are fairly limited, so if anyone tries to tell you that PCP isn’t worth looking at, it is probably because they don’t have it as part of their portfolio.

Like I said, I look at every deal on individual merit but in my opinion, if the monthly payments are the same – and you are a non-VAT registered individual – then I would generally say opt for PCP every time.

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Compass Contract Hire Limited are an official Platinum Network Partner and are a trusted intermediary that offer fantastic PCP deals. For a Personal Contract Purchase quotation on the vehicle of your choice, or for more information on their products and services, contact us or go to