Personal Contract Purchase (PCP) or Lease? Find out which option is best for you

Financing plays a key role in the UK vehicle purchasing process. Two popular options are Personal Contract Purchase (PCP) and leasing. In this article, we will explore these financing modalities, compare them and evaluate their rates, in order to help consumers choose the option that best suits their needs.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is a form of financing that allows consumers to purchase a vehicle through monthly payments. At the beginning of the contract, a residual value is agreed, which is the amount that the consumer will have to pay at the end of the term to purchase the vehicle definitively. During the contract period, the consumer pays monthly installments that cover vehicle depreciation and interest.


Leasing, on the other hand, is a long-term rental agreement. In this case, the consumer does not have the option to purchase the vehicle at the end of the contract. Instead, the consumer pays a monthly fee for using the vehicle during the agreed period. At the end of the lease, the vehicle is returned to the leasing company.

Comparison between PCP and Leasing

While both PCP and leasing involve monthly payments, there are some key differences to consider:

Vehicle Ownership

In PCP, there is the option to purchase the vehicle at the end of the contract, upon payment of the agreed residual value. In leasing, the vehicle is returned at the end of the contract, and the consumer does not become its owner.

Flexibility and Exchange Options

The PCP offers greater flexibility, allowing the consumer to choose between purchasing the vehicle definitively, refinancing the residual value or returning it at the end of the contract. In leasing, returning the vehicle is the only option.

Restrictions and Mileage

Both options may have restrictions on annual mileage
allowed. In PCP, exceeding the agreed mileage may result in additional fees. In leasing, mileage is strictly controlled, and any excess can also result in extra fees.

Rates and Best Options

Financing rates may vary depending on the financial institution, the vehicle in question and market conditions. It is important to research and compare the rates offered by different providers before making a decision.

Regarding the best options, there is no single answer. The choice between PCP and leasing will depend on individual consumer preferences and needs. If the intention is to acquire the vehicle in the future and have greater flexibility, PCP may be the most suitable option. On the other hand, if the consumer prioritizes the temporary use of the vehicle, without concerns about ownership or resale, leasing may be the ideal choice.

Companies offering these financial services in the UK

In the United Kingdom, several financial institutions and banks offer financing options, including Personal Contract Purchase (PCP) and leasing, for vehicle purchases. Below, I will present some of the main banks and financial institutions that provide these services in the country:

Santander Bank

Banco Santander is a global financial institution offering banking services and vehicle finance solutions in the UK. They offer PCP and leasing options, with a variety of terms and conditions to suit consumers’ needs.

BMW Financial Services

BMW Financial Services is a division of the BMW Group that provides finance and leasing for BMW and Mini vehicles in the UK. They provide customized PCP and leasing options with additional benefits for branded customers.

Mercedes-Benz Financial Services

Mercedes-Benz Financial Services is the financial services division of Mercedes-Benz in the United Kingdom. They offer flexible financing options, including PCP and leasing, for Mercedes-Benz vehicles, allowing customers to choose the modality that best suits their needs.

Volkswagen Financial Services

Volkswagen Financial Services is a company specializing in financial services related to the Volkswagen brand. It offers financing solutions, including PCP and leasing, for Volkswagen vehicles in the UK, enabling consumers to easily purchase a Volkswagen vehicle.


Barclays is one of the UK’s leading banks and also offers vehicle finance options including PCP and leasing. They provide a variety of flexible terms and conditions to suit individual customer needs.

Alphera Financial Services

Alphera Financial Services is a global provider of automotive financial services. In the UK, they offer financing options such as PCP and leasing for a wide range of vehicles, allowing consumers to choose the modality that best suits their preferences and budget.

It is important to note that this list does not represent all alternative companies that offer this service, and that there are other financial institutions and banks in the UK that also offer Personal Contract Purchase (PCP) and leasing as vehicle finance options. When considering these options, it is recommended to research and compare offers from different financial institutions, looking for the most favorable rates, terms and conditions to suit individual needs.