Owning a vehicle is indeed profitable, but for those who usually change models or don't have enough money to buy a vehicle, car leasing is the answer. This has several advantages because you don't have to worry about reselling if you want to buy another model and you don't have to spend a lot of money in the blink of an eye.
While this is very useful, there is one downside - the car is not yours! In response to this problem, a private purchase contract was drawn up where you could get a car rental and own a vehicle if you changed your mind.
Consumer Insights
Private contract purchases, also called PCPs, are specifically designed for private individuals. This is the most popular method of vehicle financing. This is categorized as a provisional purchase agreement that provides protection under the Consumer Credit Act of 1974 and the Financial Services Regulation of 2004.
This type of contract offers an alternative to set contract terms with monthly payments. After that time limit, it is possible that someone will pay the final payment for the ownership of the vehicle. The amount to be paid depends on the start. However, if the former is not an option, the car can easily be returned to the leasing company and you may consider a new contract or other means of financing a new vehicle if your circumstances change.
There are many advantages to buying a private contract. Monthly payments are arranged so that you can plan your account in advance, and the amount payable is usually lower than for other forms of financing. The initial payout is also low and you can refinance the payment at the end of the term if you wish.
Road tax is usually included in your payment for the first few years, and if vehicle maintenance is included, you must pay it for the duration of the contract. If you choose PCP with built-in support, you don't have to worry about repairs and maintenance because it's already on. However, this type of contract has some disadvantages as it can be very expensive compared to rental contracts and you have to worry about car insurance.
In addition, another rental option is Personal Contract Rental (PCH), which gives users a fixed monthly rental for a certain period of time. But unlike buying a private contract, which you can conclude at the end of the contract, you just need to return it in this form to the leasing company.
This method is well received by drivers of corporate cars who receive car allowances instead of giving them company cars. In general, it is very important to know how payments are calculated. The “salvage value” of the vehicle is generally determined by the private lessor.
To guess the value, the company will ask you to meet a certain mileage limit while driving and if you exceed that limit, you will be penalized at the end of the term. Now, if you drive a lot, renting a private contract may not be good for you as you will only have to pay high monthly payments if you fulfill the mileage agreement.
However, because it offers a fixed monthly payment, you benefit from driving a different model of vehicle every few years. So before you go for a private contract or private lease, the first thing you need to do is research your lifestyle.