What’s the Difference Between Leasing vs PCP?

When it comes to paying for a new car, many drivers wonder about leasing vs PCP. They’re both available here at Eden, too, making it easier to spread the cost of payment for a number of vehicles that we have here.

But what is leasing, what is PCP and which could be the right option for you? Let’s take a look.

What is leasing?

Car Leasing is, in effect, a long-term rental agreement. You’ll find the car that you want, set up an agreement which usually covers a set period, place a deposit and then make steady payments for each month. These payments cover the depreciation of the vehicle rather than its total value.

At the end of the agreement, you simply have to hand the car back to us, and that’s it - you can start a new agreement on a different vehicle, or walk away entirely. For many drivers comparing leasing vs PCP, leasing offers flexibility without the need for long-term ownership.

What is PCP?

PCP Finance is one of the most popular forms of finance today. With this method, you’ll pay a deposit followed by regular monthly payments over a pre-agreed period. Again, you’re paying off the depreciation of the vehicle rather than its outright value.

The difference to leasing is that at the end of the agreement, you’ll have the option to make a final ‘balloon’ payment, which will allow you to become the full owner of the vehicle. You don’t have to do this, however; you’re free to hand the car back without making this payment and can carry on from there.

Positives and negatives of leasing

Leasing brings a top level of flexibility. This type of payment usually brings with it a smaller initial deposit, so it’s great for those on a strict budget and in need of a car for less.

However, if you’d like to own your car at the end of an agreement then this isn’t the option for you as you’ll be required to hand the car back - another key factor when weighing leasing vs PCP.. However, if you like the idea of chopping and changing into a new car every few years, then this could be the way to go. Here at Eden, we offer a variety of cars for leasing, so there’s no drop in the number of possibilities compared with other forms of payment.

Positives and negatives of PCP

PCP is a great option for drivers who want a little bit of both. If you think you might like to own a vehicle outright at the end of an agreement, then PCP gives you that option and a decent amount of time to decide whether or not it’s right for you. Plus, if your car is worth more than the Guaranteed Future Value- or balloon payment - at the end of your agreement, then you can use this built-up equity and put it towards the deposit on a new car. Leasing vs PCP is a key comparison here for drivers considering flexibility versus eventual ownership.

PCP does mean that until you pay that final balloon payment, you won’t be the full owner of the vehicle. You’ll also need to consider mileage limits which are set at the start of the agreement, as going over these will likely mean you’ll be hit with a penalty.

Which one is right for me?

There are a great number of plus points to both of these options. If you like flexibility and are happy to not own your vehicle, then leasing will no doubt appeal the most. It’s also a good option for those who need to get a new car for less, as it often carries a lower deposit than with a PCP agreement.

PCP, meanwhile, could be good for drivers after options. At the end of the agreement, you can always pay off the vehicle in order to own it, but you may need to consider your options beforehand.

The good news is that you’ll find both leasing vs PCP used cars and new cars options available here at Eden, so check out what we’re able to offer or get in touch with a member of the team if you have any questions.