PCP versus PCH

[RosscoPColtrane888]

Hi all,

I’m looking to get a new car and I’m struggling with the merits of a PCP over a PCH.

Quite simply the initial payment on a PCH is less than a PCP deposit by about half and the monthly repayments are much about the same if not less. Obviously I can’t keep the car at the end of the PCH but to be honest after 3-4 years I’d probably want to change again.

Has anyone else reached the same conclusion? I really can’t see the benefit of a PCP from an economic point of view.

Thoughts???

[SteBrown91]

You may or may not have equity in the car at the end on PCP.

It’s also more flexible. You can sell the car at any time as long as the finance is settled with a PCH you are agreeing to rent for the contracted time and it’s often not financially sensible to bail out early

[RosscoPColtrane888]

Any advice on early termination terms on a PCH? I don’t want to get nailed for the full term.

[Macneil]

It's a 2 minute job with a calculator to work out the total cost of each option.
Then, choose the one that suits you. The cheaper one, or the more expensive one, depending on your personal money/sense ratio.
The early termination charges will be detailed in your lease agreement, if you're already thinking of how to get out of it, should you be getting into it?

[talksthetorque]

RosscoPColtrane888 said:

Any advice on early termination terms on a PCH? I don’t want to get nailed for the full term.

You sign up for the term. Any relief from the full cost of the lease is discretionary and shouldn't be relied upon.

However VAG seem to think that 55% of the remaining payments is fair enough, this is from a few people on here who have done it.

But if you think you're going to get bored before your obligations are up, PCP will provide more options at that point.

[SteBrown91]

RosscoPColtrane888 said:

Any advice on early termination terms on a PCH? I don’t want to get nailed for the full term.

Some manufacturer backed PCHs allow want 50% of the remaining payments to terminate early, other companies want the full amount. It depends on the company.

[Edible Roadkill]

I’ve pcp’d once and pch ‘d the following 4 times. I can’t get the pcp anywhere near the value of the pch deals that I find.

[Edible Roadkill]

SteBrown91 said:

RosscoPColtrane888 said:

Any advice on early termination terms on a PCH? I don’t want to get nailed for the full term.

Some manufacturer backed PCHs allow want 50% of the remaining payments to terminate early, other companies want the full amount. It depends on the company.

Yeah that’s the only thing you need to be sure you can commit to the full term as terminating early is not really viable.

[Cmdee]

Worth noting that you will be responsible for the road tax from year 2 on a pcp but it's included for the whole term on pch. This can make a big difference if the car is over £40k.

[SWoll]

What car are you looking at OP?

[RosscoPColtrane888]

Looking XC90 inscription or inscription Pro.

What’s the advice on adding options. I want to upgrade the wheels and add packages but is that a good or a bad thing on a PCH?

[Tony33]

talksthetorque said:

But if you think you're going to get bored before your obligations are up, PCP will provide more options at that point.

I think that sums up the choice. If you think circumstances might change or you want to chop it in before the term ends PCP gives you much more flexibility. Otherwise PCH is generally cheaper in my experience if you expect to get another car after the term.

[RosscoPColtrane888]

Macneil said:

It's a 2 minute job with a calculator to work out the total cost of each option.
Then, choose the one that suits you. The cheaper one, or the more expensive one, depending on your personal money/sense ratio.
The early termination charges will be detailed in your lease agreement, if you're already thinking of how to get out of it, should you be getting into it?

Isn’t it normal to consider your full contract commitment or am I being too analytical. Like someone stated above I may get bored or decide that in 3 years time i’d rather go full electric. I’d rather have the option to exit early rather than being nailed to fund someone’s depreciation over 4 years. It just seems very inequitable.

[Macneil]

you usually have to pay for the full cost of the option over your lease term, if you choose pcp then the residual value of the car may be higher as a result of the option, if so you will be paying pro rata.

[syl]

Macneil said:

It's a 2 minute job with a calculator to work out the total cost of each option.
Then, choose the one that suits you. The cheaper one, or the more expensive one, depending on your personal money/sense ratio.
The early termination charges will be detailed in your lease agreement, if you're already thinking of how to get out of it, should you be getting into it?

You can work out the maximum total cost, but you won't know the actual total cost of a PCP until you come to the end of the term - it's quite likely there will be some equity in the car over and above the GMFV. That might be virtually nothing, but it might be a few thousand.

[SWoll]

RosscoPColtrane888 said:

Isn’t it normal to consider your full contract commitment or am I being too analytical. Like someone stated above I may get bored or decide that in 3 years time i’d rather go full electric. I’d rather have the option to exit early rather than being nailed to fund someone’s depreciation over 4 years. It just seems very inequitable.

Then PCH for 2 or 3 years rather than 4?

An XC90 2.0 T5 [250] Inscription Pro 5dr AWD Gtron is going to cost you £19k over 2 years or £25k over 3 years. Obviously if you intend to add say £3600 of options that will have a significantly larger affect on the 2 year monthly cost as will have to be paid for during the period you have the vehicle.

Edited by SWoll on Saturday 2nd March 23:44