With PCP, you pay an initial deposit followed by monthly payments until the end of the contract. You then have three options: buy the car, return it to the dealer, or enter into a new PCP deal.
Four out of five of those on PCP contracts don’t choose to buy the car at the end of the contract, however. In each of those instances, they could probably have saved money by choosing a PCH scheme.
Under PCH, you don’t have the option to buy the car and become its legal owner at the end of the contract. While monthly PCP payments tend to be lower, drivers tend to pay less over the full length of the PCH contract.
There are other advantages to PCH too. At the end of your contract, there’s no debate over the estimated value of the vehicle so you won’t risk losing money on the car’s value. You won’t have to negotiate a part exchange with the dealership either.
If your car isn’t damaged and you haven’t exceeded your mileage limit, you can simply hand it back and choose your next vehicle without any hassle.
When looking at PCH, keep in mind that the lender can repossess your car without a court order. This is also true for PCP, but only until you’ve paid a third of the total amount payable. After this, the lender will need a court order.Learn more about PCP.