Business Contract Purchase or PCP is arguably the most popular form of funding for Cars and Vans today.

Pro’s:

• Lower and Flexible repayments.

• Guaranteed minimum future value - increased end of term options.

• Loan security is against the asset.

• Lower upfront costs to purchase higher spec/ higher costs models.

Cons:

• Limited flexibility to liquidate vehicle mid and early into term.

• Mileage restrictions.

• Larger final payment to own vehicle than other funding options.

This type of finance is perfect for clients whom wish to own a car between 24-49months; with guaranteed payments over term and flexible ownership or trade in options at the end and near end of term.

Traditionally the most common form of finance on used vehicles or those whom wish to own come final payment received.

Pro’s:

• Flexible payments.

• Guaranteed cost to ownership.

• Slightly longer terms available.

• Loan security against asset.

Con’s:

• Higher monthly cost.

• Less flexible at the end of agreement.

• Negative equity risk

If you favour owning the asset outright at the end of the agreement or your buying cycle is longer than 49 months - this funding option is likely to be beneficial to you.

Commercial Vehicle Leasing is one of the most popular and cost-effective ways for businesses to fund Vans and Commercial Vehicles today.

Pro’s:

• Lower monthly repayments compared to purchasing.

• Fixed costs make budgeting and cashflow planning easier.

• No vehicle ownership risk or depreciation concerns.

• Ability to operate newer, higher-spec vehicles with minimal upfront cost.

• Optional maintenance packages to reduce unexpected expenses.

Cons:

• Vehicle is not owned at the end of the agreement.

• Mileage limits apply, with excess mileage charges.

• Early termination can be costly.

• No opportunity to benefit from vehicle equity or resale value.

This type of funding is ideal for businesses looking to operate a commercial vehicle over 24–60 months, with predictable monthly payments, minimal upfront costs, and the flexibility to upgrade or replace vehicles at the end of the lease without the risks associated with ownership.

Taking this route gives you a lot of flexibility to replace or upgrade your vehicle but does have some fundamental differences to consider.

Pro’s:

• Immediate ownership of the vehicle
  The car or van is yours from day one, with no finance secured against it.

• No mileage or condition restrictions
  Drive as much as you like and keep the car however you choose.

• Freedom to modify or sell the vehicle
  You can customise the car or sell it at any time without lender approval.

• Fixed monthly repayments
  Predictable payments make budgeting simple.

• Potentially lower interest rates
  For customers with strong business accounts and credit profiles, business loans can offer competitive APRs.

• Flexible vehicle choice
  Works for new or used cars, private sales, or dealer purchases.

• No balloon payment
  The loan is fully repaid over the term with no large final payment to plan for.

Con’s:

• Higher monthly repayments
  Because there’s no balloon payment, monthly costs are often higher than PCP or Lease Purchase.

• Credit risk not linked to the vehicle
  The business is still liable for the loan even if the vehicle is written off or sold for less than expected.

• No built-in depreciation protection
  You carry all the risk if the car’s value drops faster than anticipated.

• May require strong credit
  Competitive rates are usually only available to borrowers with good or excellent credit histories.

• Shorter maximum terms
  Business loans often have shorter repayment periods than vehicle-specific finance, increasing monthly cost.

Depending on the depreciation point and desired ownership timescale of the vehicle you are looking to purchase - this can be a great option or one to avoid.

We give guidance on this to reduce your risk.