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Leasing Types Explained

ULTRACAR LEASING TYPES EXPLAINED

Years ago vehicle leasing was generally only entered into by businesses , times have changed with more and more individuals getting personal car leasing contracts instead of purchasing a new vehicle.

The reason for this is, as a rule, you can usually get a better car leasing, than perhaps you could afford to buy outright. Furthermore, you will only have the vehicle for the leasing term, then you can renew your vehicle for a newer one. However, how do you decide which lease type is better for you?

WHAT LEASING TYPES ARE THERE?

There are two different leasing types, these are PCP and PCH. The difference between the two is with PCP you are able to purchase the car at the end of your leasing term, PCH means you hand the vehicle back at the end of your agreement.

LEASING TYPE 1 – PCP = PERSONAL CONTRACT PURCHASE

A PCP is where you will pay approximately 10% of the car value as an initial payment, then monthly payments until the end of your agreement.

At the beginning of your PCP a value of your car will be specified which will be the balloon payment. It is the balloon payment you will need to pay at the end of your lease.

When your PCP comes to an end you will have 3 options

  • Buy the car ‘Balloon Payment’
  • Exchange for another car using the equity of the car you already have
  • Walk away

It is worth noting with a PCP:

  • When your agreement comes to an end the car must be in good condition, you will be liable for any repairs that need to be made to the car.
  • You will have an agreed mileage, if you go over the mileage you will have to pay extra / mile.
  • Your equity is in that car; therefore you will have to stick with that specific dealership to be able to benefit from the equity. If you wish to move to a different dealer your equity is lost.

Leasing type 2 – PCH – Personal Contract Hire

At UltraCar we only supply PCH leasing and this is specifically for customers with an unhealthy credit score, see more here

With a PCH you will never have the responsibility of having to take ownership of the vehicle. With a PCH you will be required to make an initial payment and then fixed monthly payments until the end of your agreement.

When your PCH comes to an end you have 2 options

  • Renew (with UltraCar no need to pay another initial payment)
  • Walk away

Notes for PCH:

  • When your agreement comes to an end the car must be in fair wear and tear condition, you will be liable for any major repairs that need to be made to the car.
  • You will have an agreed mileage, if you go over the mileage you will have to pay extra / mile.
  • You do not have any equity in the car, which means you are able to shop around to find you next car leasing deal.
  • Monthly repayments are usually lower than PCP or car loans.
  • No car depreciation value worries
  • No Road Tax to pay