Car Finance / Lease Question

[dictys]

Is there any disavantages or advantages for a private buyer between a personal contract lease and a PCP finance type deal on the basis that:

(1) The car will be only kept for 3 years
(2) The monthly payments and intial deposit are the same for both the finance or the lease agreement.
(3) Neither deal includes servicing, however the lease includes road tax for the 3 years.
(3) Will not want to purchase the car at the end of the period,
(4) However, may want another new car at end of period from the same make, but not certain.

The dealer is pushing the PCP as he says it has more flexibility if circumstances change etc etc.

I am finding hard to distinguish any real difference to the two deals.

[Andy665]

PCP for two key reasons:

You are not tied in to the full term, it's HP with a different payment profile so you can settle at any time, a lease is generally much more expensive to get out of - you will need to check the T&C very carefully

If there is any equity in the car on he PCP it's yours, any loss and its the finance houses loss, with lease you never have any chance of equity

I'm surprised the dealer did not point out these two fundamental differences

[anonymous-user]

^^^^ This

If the payments are the same go for the PCP, more flexible and more options at the end of the term. You say you won't want to buy the car at the end but what if it's worth a fair bit more than the final payment? Also PCP is far easier to exit if your circumstances change.

I'm saying this as someone who currently leases and is happy with doing it.

[CYMR0]

Andy665 said:

PCP for two key reasons:

You are not tied in to the full term, it's HP with a different payment profile so you can settle at any time, a lease is generally much more expensive to get out of - you will need to check the T&C very carefully

If there is any equity in the car on the PCP it's yours, any loss and its the finance houses loss, with lease you never have any chance of equity

I'm surprised the dealer did not point out these two fundamental differences

Most of that's true; only thing I would add is that if there is any loss before the MGFV, i.e., if you owe £7k on a car worth £6k, but with an MGFV of £5k, until the end of contract and the MGFV applies, it's still your problem (unless you pay down faster than the car depreciates, or pay it down until you've passed 50% of the total credit price under the CCA).