Nowadays, buying a brand new car outright with cash, a loan or on hire purchase is a luxury few can afford. With cars typically losing 20% of their value as soon as they leave the forecourt, buying a car only really makes sense if you’re planning to own it for many years.
As technology evolves on a daily basis and we have an abundance of choice available at our fingertips at all times, we are conditioned to want to upgrade all the time - whether it’s our TVs, our phones or our cars.
What is the difference between PCP and PCH?
4 in every 5 new cars sold in the UK are agreed on Personal Contract Purchase (PCP) or Personal Contract Hire (PCH) agreements. PCH is otherwise known as leasing, whilst PCP is - as the name suggests - a purchase.
With PCH, monthly payments are agreed based on the length of time the car is required for and the amount of anticipated mileage during the term. Throughout the term, the car remains the property of the car finance company. When the term ends, most people replace the vehicle for another - how this is done depends on the agreement chosen.
The differences are subtle as the contracts operate in the same way: through monthly payments.
With PCP, there are more moving parts involved. There is an initial deposit, typically 10% of the agreed selling price, monthly payments subject to interest and a final balloon payment should you wish to own the vehicle at the end. However, as people grow to appreciate the value of a regular car upgrade, PCH is becoming increasingly recognised as the more flexible arrangement.
PCH has an initial deposit which you decide upon and is typically multiples of the monthly payment. Compared to PCP, the deposits can be significantly lower. At the end of your contract, you simply hand back your leased vehicle because, unlike PCP, there is no option to own the car at the end. When leasing, you decide whether you want to select another vehicle when the contract expires and are free to decide who to do this with.
PCP is sold by dealerships who tend to operate with only a few brands whilst leasing companies typically offer a wider range of makes from which to choose from.
How can my car lease help me earn money?
In a survey of 1,000 households with brand new cars on car finance agreements, Karshare discovered that 4 out of 10 are losing sleep worrying about how to meet their fixed monthly outgoings while over half have shared that their monthly car finance agreement payments are one of their biggest financial concerns. With Covid putting a significant financial strain on UK households, we also know that 83% of people are actively looking for ways to boost their income and sharing assets is a way to do this.
This is why Karshare has partnered with global car leasing firm Leasys to enable consumers to take a PCH agreement that permits hiring to vetted drivers in their communities for the very first time in the UK. Called Lease and Share, this groundbreaking innovation will unlock earning potential for millions of people and help Karshare in our mission towards achieving a sustainable and shared future.
Choosing to lease a new car with Lease and Share and making it available within your community to rent can earn you up to £550 a month!
The pandemic has changed the landscape for everyone and our partners at Leasys have recognised that the car leasing sector has to change to keep up with the evolving environment. Not only does Lease and Share offer you a flexible way to drive a car, it also recognises the sustainability benefits that car sharing brings communities and offers customers a way to reduce their monthly cost of motoring.
Cars remain unused 95% of the time, so whenever your leased car is sitting idle, simply make it available on the Karshare platform for others to rent and watch the money trickle into your account, without having to move a finger. Our innovative KarshareGo technology makes it possible for vetted renters to access your car without a fussy key handover while our comprehensive insurance ensures that you are fully covered under Karshare’s policy.