The Main Questions to Ask Yourself if You are Choosing Between a PCP or PCH Deal

posted by Chris Valentine

There are many valid reasons why more consumers are choosing deals such as a personal contract purchase or personal contract hire deal for their cars, and these two deals are undeniably beneficial in many ways. With personal contract purchase or PCP agreements, you have the chance of owning the vehicle once the contract is finished, and with a personal contract hire arrangement, you can gain access to a luxury, high-end vehicle without worrying about a high deposit and depreciation. But whilst both of these deals are arguably tempting in their own right, which deal will suit you the most? To help you with your decision, here are the main questions you should ask yourself if you are choosing between a PCP or PCH deal.

1. Would you like to be the vehicle owner at some point?

If owning the vehicle is important to you, then a personal contract purchase deal may be the better option. But consider this as well – when you own the vehicle after a few years, it may begin to show some issues, and this entails cost. You will already have to factor in the cost of insurance and maintenance and servicing, which you would not have to think about if you were to go for a PCH agreement. If, on the other hand, you don’t consider it a priority to own the vehicle you are driving and would much rather let it go after a few years and opt for a new one, then a personal contract hire arrangement can be a more suitable option. 

2. Are you particular about the make and model of the vehicle you want?

Here’s another factor to take into account: are you particular with the make and model of the vehicle you want? What kind of vehicle would you like to have? If you would like to have the opportunity to drive a more luxurious vehicle but you simply cannot afford it on your budget, it may be wiser to choose a personal contract hire agreement, such as those offered by Diamond Contract Hire. If you are choosing a car for business, you can impress more clients with a high-end model than a standard car. What’s more, you can offset this on your taxes as well. 

3. Can you afford to pay the ‘balloon payment’ that comes with a personal contract purchase?

With personal contract purchase deals, there is a balloon payment you have to settle so you can own the vehicle at the end of the term. The balloon payment will be the vehicle’s residual value, but it can be higher or lower based on the vehicle’s depreciation. Are you willing to pay it so you can own your car after a few years of use? If you are, then you can choose to have a PCP deal. But if you are not keen on the idea of paying for a car that’s already several years old, you are better off with personal contract hire.  

There are other essential questions. How confident are you about affording the monthly payments from, say, 2 years up to 5 years? Additionally, consider whether you would like a brand new vehicle or a used vehicle. Once you answer these questions, it will be easier to make your final decision. 

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