A car is a major purchase for most of us – and often, it can take years for the cost of an upgrade to be paid back. There are several ways around this, including financing. But car leasing, from a reputable company like ZenAuto, is an option that many might be tempted by. But exactly what does it involve?
PCH and PCP
If you’ve spent even a small amount of time investigating the merits of a lease, then you might have run into the terms ‘PCP’ and ‘PCH’. These refer to ‘personal contract purchase’ and ‘personal contract hire’. In the former case, you’ll have the option of buying the car in the future, while in the latter case you won’t – but this disadvantage tends to be offset by lowered costs.
If you’re predominantly using the car for business, then you might be tempted by something called ‘BCH’ (that’s Business Contract Hire). This provides tax advantages for VAT-registered businesses.
MOT certificates aren’t necessary for the first three years of a car’s lifespan. Given that lease cars are brand new, and lease contracts don’t tend to extend that long, it’s unlikely that you’ll need to think about the cost of MOTing. The same doesn’t go for insurance costs; these are handled separately, and so you’ll need to deal with insurers as though the car were your own.
Leasing versus buying
You can think of leasing as a form of long-term rental. You don’t own the car yourself, but you do drive it. Of course, the people who actually do own the car aren’t going to allow you to do just anything with it, which is why there are a number of conditions attached. You won’t be able to drive it beyond a certain number of miles, and your credit history will be pored through to ensure you are a reliable borrower. In most cases, you’ll need to pay for the first few months up-front.
The excess miles you drive beyond the agreed-upon limit will incur additional charges, which will be stipulated in your contract.
If you’re buying, then you won’t have to deal with any of these conditions, as the car is yours to do with as you please. This considerable upside is offset by the upfront cost of your car, and the cost of buying and selling when the time comes to make a switch. When you’re leasing, you can trade your car in at fixed intervals for an upgrade, which makes it a sensible choice for those looking to stay at the cutting edge with minimal stress.