![]() ![]() How you plan to use the vehicle, whether you want to own it and your monthly budget will all give you an indication of which type of deal you should go with. There are several factors you should consider which will help you decide which option is right for you. The monthly payments for your deal is the difference between the car’s retail price from when you first receive it and its end-of-contract value. The lump sum is determined by the finance house at the start of a deal, who will calculate the GMFV (Guaranteed Minimum Future Value) of your car at the end of the deal. This only applies if you choose to purchase the car at the end of the contract.Įven if you don’t have any interest in owning the car at the end, you’ll still agree this final settlement fee at the start. With PCP, not only is there a deposit at the start of the agreement, but also a balloon payment at the end. ![]() So you’ll want to look for low interest rates when deciding on a PCP deal, as well as the total cost of finance once admin fees, monthly payments and deposit are factored in. However, on used cars this can be as high as 20%. PCP contracts work like a loan so you can see the rate of interest you pay, which is usually between 4-8%. Leasing companies don’t show this in the contract and essentially it’s covered in the monthly payments. This is the amount you pay each year to borrow money from the finance provider to finance your car. There are also other factors to consider on a PCP deal that you wouldn’t need to on a lease, such as APR (Annual Percentage Rate) interest rates. You can either hand your car back to the provider, swap it for a new one (and use any equity towards the deposit on another car), or buy it by paying a lump sum known as the balloon payment. PCP finance differs to leasing in that you have more flexibility at the end of your agreement. However, if you have a set budget you can afford each month for a car, leasing is an affordable way to drive a new vehicle. Unlike PCP agreements, you don’t have the option to own the car at the end. When handing the car back, you’ll have to make sure that you’ve stuck to your agreed annual mileage and that it’s in a condition that reflects fair use. At the end of your contract, you simply hand the lease car back to the leasing company and either take out another deal on a new model, or you can walk away. Leasing lets you pay a set monthly fee for a brand-new car every 2-4 years. Want to find out whether leasing or PCP fits your motoring needs better? Read our guide for everything you need to know before deciding. Leasing doesn’t give you the option of owning the car at the end, whereas PCP does, albeit for a lump fee at the end of your deal. Both involve long-term rental of a new vehicle, with the latter also offering deals on used cars too. Two popular options of vehicle finance are leasing (also known as Personal Contract Hire or PCH) and Personal Contract Purchase (PCP). Our calls may be recorded for training and monitoring purposes.Whichever method you use for getting your next car, what matters is you get the best deal for a model which suits your lifestyle. To unsubscribe, simply reply to this email or update your preferences here. You are receiving this email because you’re a current Frosts customer and opted in to receive email communications. Registered Office Address: 1 Stoney Lane, Shoreham-by-Sea, West Sussex, BN43 6LA. Registered in England and Wales - Company Number 511284. We need to see the vehicle to provide a guaranteed valuation. Any part exchange valuation provided on our website is a guide price and not a guaranteed purchase / part exchange valuation. We can introduce to a limited number of carefully selected finance providers and may receive a commission from them for the introduction. Frosts (Cars) Limited act as a non-independent credit intermediary for a limited number of lenders and are able to offer a limited number of finance products from these providers. Frosts Cars Ltd are authorised and regulated by the Financial Conduct Authority (register number 673511).
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