Sick of sky-high prices and worrying about your car’s value dropping like a stone, especially when it comes to trade-in time? LeaseCar.uk, a trading arm of Central Contracts, suggests Personal Contract Hire (PCH), more commonly known as car leasing, is the smartest way to drive a new car right now.
With the cost of everything seemingly always on the rise and new electric cars coming thick and fast, PCH is booming because it offers low, predictable monthly payments and lets you jump into a brand-new car at the end of the lease period without the hassle of selling it.
Central Contracts’ latest figures show that consumer demand for PCH is up sharply, proving the average Brit is waking up to this brilliant way to beat the cost-of-living squeeze on the driveway.
Navigating the world of car finance can be confusing, but understanding the options is the first step to making the right choice for your lifestyle and budget. The main ways to acquire a new car are through various finance agreements or by purchasing it outright.
Why you should zone in on PCH for your next car
Gareth Roberts, strategy director at Central Contracts, highlights just why PCH is the real winner.
- Lower monthly payments: PCH deals often have the cheapest monthly payments of any finance option. You’re only paying for the car’s use, not its full purchase price. This makes driving a brand-new, safer, and more fuel-efficient car affordable again.
- Zero depreciation risk: When you buy a new car, its value plunges. With car leasing the leasing company takes that risk, not you! If the car is worth less than expected at the end, that’s their problem, not yours.
- Hassle-free motoring: Road tax is usually included, and you can add a maintenance package to cover servicing and replacement tyres. It’s fixed-cost, hassle-free driving. At the end? Just hand back the keys and grab your next new motor*.
- Try electric vehicles (EVs) safely: With EV technology changing so quickly, many people fear buying one outright. PCH lets you drive a brand-new EV for 2-4 years, allowing you to enjoy the latest tech, and swap it for a better model without worrying about the battery’s long-term value – or being stuck with a car that has outdated tech.
PCH: winning the battle against the cost of living
Gareth said: “PCH is your shield against the cost-of-living crunch on the driveway. You lock in low, fixed monthly payments and you’re completely protected from the car’s value dropping, which is a risk no one needs right now.
“And, with PCH, you’re not buying yesterday’s technology, you’re renting tomorrows. It’s the smartest way, for example, to try an electric car, enjoy the latest safety tech, and simply swap it for the next model when your contract ends.
“Finally, PCH is the ultimate ‘hands-off’ approach to new car ownership. No stressful selling, no depreciation worry, and often the road tax and servicing are all bundled into one easy payment, so you just focus on driving.”
Here’s Central Contracts’ guide to choosing the right finance for your next car
|
Option |
What is it? |
Monthly Cost |
End of Contract |
Who is it for? |
|---|---|---|---|---|
|
Personal Contract Hire (PCH) |
Long-term rental. You never own the car. |
Lowest. Based on the car’s depreciation (loss of value) only. |
Give it back. Simply hand over the keys and walk away*. |
People who want the cheapest monthly payments and never want to own or sell a car. |
|
Personal Contract Purchase (PCP) |
A finance plan with a big choice at the end. |
Low. Like PCH, it only covers depreciation, not the full cost. |
Choose: 1) Hand it back, 2) Trade it in, or 3) Pay a large final “balloon payment” to own it. |
People who like lower payments but want the option to buy the car later. |
|
Hire Purchase (HP) |
A finance agreement secured against the car. |
Highest. The payments cover the full cost of the car plus interest. |
You own it! Once the final payment is made, the car is legally yours. |
People who must own the car and don’t want a big final payment. |
|
Personal Loan/ Cash |
Borrow the money from a bank or use your savings. |
Varies by interest rate. (Zero with cash.) |
You own it instantly. |
People who want full ownership from day one with no mileage or damage restrictions. |
Both PCH and PCP deals have strict annual mileage limits. Go over the limit and you’ll be charged with an extra per-mile fee. If you’re a high-mileage driver, consider the options carefully.
How much do you pay for the different car finance options?
|
|
PCH |
PCP |
HP |
Personal Loan |
|
Kia Sportage 1.6 GDi Hybrid GT Line Auto |
£403.58 |
£587 |
£1,214 |
£1,119.09 |
|
Based on 36 equal payments |
|
|
|
|
PCH costs less per month for your new car
Leasing offers the most cost-effective way of driving a new car without ever owning it. The other finance agreements are generally more expensive, and you end up owning the car. But in a world of volatile used car prices and rapidly changing technology, is this the best use of your money when you could be stepping into a new car on a regular basis?