What if PCP and PCH Costs are the same (Which is better)

20vt-rs

Hi...

I've had PCH cars for the past 7-8 years and it has worked well, I don't wish to buy or keep the car, and happy to change every so often once the contract is up. I am looking at changing again this year and since the last car, PCH's have gone up quite a bit, but on the whole still cheaper than a PCP.

However, one car I am looking at has a manufacturer offer on PCP (deposit contribution & 0% APR), which actually makes is around £10 a month cheaper than the PCH on the same car with the same mileage etc. (This includes taking into account having to pay for road fund licence on the PCP, which is not included like it is on PCH).

On this basis, am I missing anything by just taking the PCP option? I won't have maintenance on either, and I still don't want to keep the car at the end or buy it, but I think this also gives a bit of a comfort blanket in that I could settle and hand the car back early if required, which is harder on PCH.

I am looking at an EV, which will be the first in the household, having this comfort blanket is nice in case EV doesn't work out for us. I think it will but haven't lived with one yet.

Anything else to consider, any comments? Thank you!

Ectophile

PCH is essentially a long term hire.  At the end of the hire period, you have to hand the car back.

PCP is a finance agreement to buy the car.  At the end of the period, you can pay the balloon payment and keep it.  Or hand it back.  Or sell ir to a dealer (who will sort out the balloon payment).

DullGreyGuy

20vt-rs said:

I've had PCH cars for the past 7-8 years and it has worked well, I don't wish to buy or keep the car, and happy to change every so often once the contract is up. I am looking at changing again this year and since the last car, PCH's have gone up quite a bit, but on the whole still cheaper than a PCP.

However, one car I am looking at has a manufacturer offer on PCP (deposit contribution & 0% APR), which actually makes is around £10 a month cheaper than the PCH on the same car with the same mileage etc. (This includes taking into account having to pay for road fund licence on the PCP, which is not included like it is on PCH).

On this basis, am I missing anything by just taking the PCP option? I won't have maintenance on either, and I still don't want to keep the car at the end or buy it, but I think this also gives a bit of a comfort blanket in that I could settle and hand the car back early if required, which is harder on PCH.

I am looking at an EV, which will be the first in the household, having this comfort blanket is nice in case EV doesn't work out for us. I think it will but haven't lived with one yet.

Anything else to consider, any comments? Thank you!

PCP gives you options, if the car is worth more than the balloon you can liquidate the car and keep the difference. If it's out of the money you just hand it back and walk away. In principle you could try and rebuy it via auction if its out the money and you want it. 

PCP has voluntary termination options too, though depending on the numbers it may only happen late in the deal if at all, depending on what proportion the balloon is of the total value. PCH you are stuck there until the end. 

PCH you pretty much have to give it back, some may give you an option to buy it, say via a "friend", but you are at their mercy as to what price they may charge. 

Double check what is included in the price for both, PCH will normally include the tax disc whereas PCP normally won't after the first year. Similarly look at things like servicing or breakdown which can also vary between deals. 

20vt-rs

Thanks for the feedback, I missed these comments before. I ended up going PCP in the end, the monthly cost was around £20 cheaper than a PCH on the same vehicle. Even if I consider having to pay road tax for years 2,3 & 4, it is still better off going PCP. Plus, not locked in so much as a PCH. The main factor for this, is the manufacturer contribution and 0% interest on taking a PCP on a new car, which worked out cheaper than getting a second hand one! Anyway, car is here this week, and very happy