Why PCP is a bad idea

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Reading Time: 3 minutes

Personal Contract Purchase or PCP as it’s more commonly known is an affordable, easy way to purchase a new car.

You put down a deposit, pay monthly and then at the end there’s a balloon payment to make and the car is yours.

Mileage is often limited to a pre-agreed figure, you’ll be penalised if you go over this. If the car goes back with any damage, you’ll also be charged for the repairs.

Monthly payments are cheap as you’re often only paying 1/3 of the cars list price. The deals are often balanced so your car is worth slightly more than the final balloon payment. This gives you a ‘deposit’ for your next deal, and they like to keep you tied in to the same brand or dealership so they’ll offer you that as a deposit on your next car. Therefore, you pay nothing and essentially continue the payments.


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Personal Contract Hire or PCH is often a better way to do things. PCH starts the same as PCP, you normally pay a deposit but this is in the form of a set amount of monthly payments. The norm is roughly three months’ put down.

Following that are fixed monthly payments, as with PCP. You’re also offered servicing or maintenance plans as extras, this can negate the cost of expensive garage bills or the need to buy tires. Which is always handy when those elements are factored in.

Road tax is also included in those monthly payments. All you have to do is pay for your insurance and fuel.

PCH deals are becoming ever shorter, you can opt for as little as six months these days, but the majority are still 36 or 48 months, so three or four years respectively.


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As with PCP you have to put down your estimated annual mileage and there will be charges if you go over this. Again, you’ll have to pay if there’s damage apart from normal wear and tear.

It’s basically like renting your car long term. It works out better if you never want to own the car or like to motor often. Monthly prices can often be lower too, depending on the deal you find.

When the term ends you simply hand the car back.

You just need to make sure you’re saving a deposit for your next vehicle whilst you’re leasing your current one.


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PCH will often get you a nicer, bigger, more luxurious vehicle compared to what you were looking for initially. Vantage Leasing is, in particular, an up and coming leasing broker that caught my eye.

You can see from their homepage that they specialise in Jaguar Land Rover and we actually wrote about them here regarding their highly affordable Range Rover Evoque lease deal.  But now it seems they are branching out into other areas, recently launching their special offers page that has some fantastic personal lease deals on there.

If you’re after something a bit lavish the new Land Rover Velar and Jaguar F-Type can both be had for under £400 a month on a business lease. The majority of leasing companies will also have monthly special offers, so it’s worth keeping an eye out.


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