Car leasing: Personal contract purchase or subscription

Personal contract purchase can be a way to get a new electric car - but it usually involves high monthly payments, little flexibility, and a long contract term before you have the chance to purchase the car.

Is this form of leasing still one of the most convenient ways to drive the latest electric cars? In this article, we explain how personal contract purchase (PCP) works, what makes it different from hire purchase and personal contract hire, and share how electric car subscriptions are making restrictive electric car leasing a thing of the past.

Summary

Personal contract purchase gives you the option of purchasing a new car at the end of your lease.
You can use PCP to finance a new car, but there are penalties for ending the contract early, and you’re responsible for your own insurance, maintenance, and charging.
Subscriptions are an increasingly popular way to access all the latest electric car models. Simply register with Onto and reserve your first electric car.
With an Onto subscription, fully comprehensive insurance, maintenance, and free public charging options are all included in your monthly subscription fee.

What is personal contract purchase?

Personal contract purchase is one of the traditional ways to lease a car. PCP is largely the same as personal contract hire, but unlike PCH, PCP gives you the option of purchasing your car at the end of your lease.

What is the difference between personal contract purchase and hire purchase?

Personal contract purchase is a lease with the option to purchase at the end of the lease. With PCP, you pay an initial deposit then make payments toward the outstanding value of your car for the duration of your contract.

At the end of your contract, the dealer will assess the value of the car for its guaranteed minimum future value, or GMFV. If you want to own the car, you will then have to pay the GMFV in full. This large final payment is usually referred to as a ‘balloon payment’.

Hire purchase is a method of financing car ownership through monthly payments. Through hire purchase, you put down an initial deposit, then make monthly payments based on the remaining balance.

Once you’ve made all of your monthly hire purchase payments, you own your car outright.

How does personal contract purchase work?

If you use personal contract purchase to finance your new car, the process generally involves:

An initial non-refundable deposit - at least 10% of the value of the vehicle.
High monthly and overall payments - compared to other financing options like PCH and Hire Purchase.
A large final ‘balloon payment’ - based on the car’s guaranteed minimum future value, usually thousands of pounds more than your monthly payments.
Long-term commitment - usually three to five years.

Like personal contract hire, PCP agreements have a number of limitations. There are restrictions on the number of miles you can drive (with fees for excess mileage), penalties for ending contracts early, and no extras included.

If you finance a new electric vehicle through PCP, you’ll have to secure your own insurance, take care of your own maintenance, and pay for all of your own charging. Additionally, you’ll be responsible for the whole process when the time comes to sell it.

What is an electric car subscription with Onto?

Car subscriptions have become one of the most convenient ways to access an electric vehicle (EV) without the hassle of long contracts or large deposits.

Electric car subscriptions with Onto feature:

No initial deposit - a monthly subscription fee is due only after you’ve reserved your first electric car.
Competitive monthly fees - we constantly monitor the market to ensure we’re offering our subscribers more cost-effective options than traditional leasing or hire purchase.
Comprehensive insurance and free public charging options - subscriptions with Onto are all-inclusive.

There are no deposits to pay, no multi-year commitments, and no hidden fees. We take care of everything you need to get on the road safely and securely, and include fully comprehensive insurance, maintenance, and even free public charging options as standard with every subscription.

Personal contract purchase or subscription, simplified

Get the key facts about personal contract hire and subscription at a glance with our comparison table:

	Personal contract purchase	Subscription with Onto
Deposit	10% or more of the car’s value	None
Sign-up	Usually in person at a dealer or with a broker, extensive paperwork	Easy to complete through our website or app, with all data stored digitally and securely
Contract	3 - 5 years, with penalties for ending early	Monthly, with the option to cancel each month
Flexibility	Drive the same car for the duration of your lease	Stick to one favourite car or choose a different one each month - it’s up to you!
Mileage allowance	Can be as low as 400 miles a month, with fines for going over	750 miles per month, with the option of purchasing an additional 250, 500, 750, or 1,000 miles in our app
Maintenance	Not included	Included with your Onto subscription
Insurance	Not included	Fully comprehensive, included with your Onto subscription
Charging	Not included	Free charging at several nation-wide public charging networks

Car leasing: Hire purchase vs subscription: Should you choose hire purchase or a subscription service for your new electric car? Learn more about each option with our comprehensive guide.
Car leasing: Personal contract hire vs subscription: Is leasing still the best way to drive the latest electric car models? We give an overview of PCH, and share how subscriptions are changing access to electric cars.
How to find the best deals and get a cheap car lease: Are you looking for a cheap car lease? We look at some of the strategies drivers use to try to get deals on their leases, and how car subscriptions with Onto can be more convenient and cost-effective.

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