Personal Contract Hire Vs Rent 2 Buy

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Personal Contract Purchase (PCP) has been all the rage over the last decade, allowing tradespeople to get hold of a brand new van with payments being spread over a longer period of time before ultimately giving the keys back to the dealership. Rent 2 Buy however, is new on the block with a lower deposit and no balloon payment at the end, meaning drivers fully own the van at the end.

Both deals are popular so we’ve listed some of the top pros and cons of both deals to help you decide what works best for you.

PCP Cons

The biggest problem comes with the fact you’ll most likely never fully own the van, due to the fact there will be a sizeable final balloon payment to make at the end. You’ll also be hit by any end of contract charges on the van (e.g. scratches/dents) which can sometimes run into thousands of pounds.

Dealerships will normally ask you to pay the VAT upfront which is normally a sizeable amount and on the subject of barriers, many dealers might also have strict credit checks which might be a problem to many in the trade.

PCP Pros

The introduction of the PCP in 1992 by Ford opened up the door to owning your dream car at a affordable cost. With a deposit to pay at the beginning and final balloon payment at the end of the deal, monthly repayments are made significantly smaller with a PCP. As the scheme is so popular, you can normally shop around and be flexible when it comes to deposits, lengths of contract and monthly payments.

Rent 2 Buy cons

As there’s no balloon payment at the end, you’ll be paying for the van as you go, rather than shifting all the cost towards the end. This means your weekly rental will appear higher during the contract.

Rent 2 Buy Pros

Rent 2 Buy works differently to PCP, in that there is no upfront VAT costs, and you fully own the van at the end of the contract, meaning you’ve got nice asset worth £1000’s at the end. Whilst dealerships may a do strict credit checks, on Rent 2 Buy the barrier is more open so tradespeople from all backgrounds can become van owners. Since you’ll be owning the van you won’t also need to worry about any end of contract charges.

Fancy owning a van with no upfront VAT costs and no balloon payment at the end? Click on this link for more information