Which deal is right for you?

THE DEAL PERSONAL CONTRACT PURCHASE (PCP)

What is it? A sort of long-term rental agreement lasting three to five years. You pay a deposit of around 10% of the car’s value, then make monthly payments, plus interest. At the end of your agreement, you can choose to make a final payment (normally

a few thousand pounds) to own the car or hand it back in exchange for a new car and a new PCP agreement.

Who does it suit? Someone who likes fixed monthly payments, with the flexibility of having options at the end of the deal.

What are the cons? There may be restrictions, such as a mileage limitation and you’re likely to pay more than with other types of finance.

THE DEAL PERSONAL CONTRACT HIRE (PCH)

What is it? PCH allows you to use a car over a set period of time (typically between two to four years), but you don’t own the vehicle at the end. A maintenance package is often included, covering items such as annual car tax and routine servicing.

Who does it suit? Someone who likes to drive the latest model, updating every few years, and doesn’t want to pay an expensive upfront deposit.

What are the cons? There is no option to buy the car.

THE DEAL BANK LOAN

What is it? A straightforward loan from a bank that you pay back in regular monthly payments over a pre-agreed amount of time. The best way to compare loans is on APR (the annual percentage rate); this is the real cost of borrowing money because it includes interest and charges. The lower the APR, the better the finance deal.

Who does it suit? Someone who wants to buy a car outright and who prefers to evenly spread repayments throughout the term of the agreement.

What are the cons? You may be fed up with the car you have bought long before you have finished paying off the loan.

THE DEAL LEASING

What is it? You pay a deposit and a fixed monthly payment, normally including service and maintenance charges.

Who does it suit? Anyone who is unwilling (or unable) to pay upfront for a car and who likes the flexibility of a finance deal.

What are the cons? As with all the above deals, you may not be able to get out of the agreement if you find you can’t afford the payments.