PCP Buisness and Personal

baxgttdi

This might be a very silly question to ask but hopefully someone can give me a definitive answer. Basically it's that time for me to look for a new car again and as seems to be the current tend I'm looking into PCP. My query really relates to the difference between the 2 catergories of PCP buissness and leasing, as the buisness PCP looks remarkably cheap whereas in comparison the personal PCP at first glance (possibly only to soeone very stupid like me) looks to be more expensive than just buying on HP which wuld tend to defeat the object for me. Am I wrong in thinking that most ppl who are using the PCP methos of aquiring vehicles must somehow be gettingthe buisness leases firstly as stated abve as it s so much cheaper and secondly because...well who buys a lotus elise as an actual buisness car???!

Please don't flame me, I just don't get it. Thanks.

Steve_66_2

It's possible that you may be comparing a PCP (Personal Contract Purchase) with an 'operating lease', which is a product commonly referred to as 'Contract Hire' - aimed at the VAT registered business user.

Contract hire rentals are generally quoted net of VAT, so appear far less costly. Most VAT registered business users can claim back half of the VAT on their monthly rental. At the end of the contract period the vehicle is returned to the lessor, the lessee (user) neither sharing in the risk or reward of its disposal value.

PCPs are aimed at the private user who is of course not VAT registered. At the end of the contract the user can choose to return the car or 'purchase' it at a pre-agreed value (often referred to as the GFV or Guaranteed Future Value). Theoretically the car will be worth more than the GFV and often this 'equity' will become the deposit on a new car/agreement.

Hope that helps!

Lemonade_Pockets

I agree with the above but there hundreds of other reasons depending on the precise nature of the products you are looking at, we would be able to give you a more conclusive answer if you posted two examples.