Lease, PCP or buy: how car costs really compare
However you get a car, the biggest cost is usually the same invisible thing: , the value the car loses while you have it. Buying, PCP and leasing are really just different ways of paying for that. Understanding the shape of each makes the numbers a lot less mysterious.
Buying outright
You pay the full price and own the car. Your real cost isn't the price — it's the price minus what the car is worth when you come to sell it (its ). Own it long enough and depreciation slows right down, which is why keeping a car for years is often the cheapest route per year. The trade-off is a big lump sum up front.
PCP
(Personal Contract Purchase) splits it up: a deposit, monthly payments, then a choice at the end. You can hand the car back and walk away, or pay a large final — the Guaranteed Minimum Future Value — to keep it. The monthlies mostly cover the depreciation over the term, plus interest (an ), so a like-for-like comparison always needs that APR and the balloon figure.
Leasing (PCH)
A lease, or Personal Contract Hire, is a long-term rental: an initial payment then fixed monthlies for a set term, after which the car simply goes back. You never own it, and there's no balloon and no resale to worry about — you're paying purely for use over those years, within an agreed mileage limit.
Comparing them fairly
The fair comparison is total cost over the same term for the same car — and for buying and PCP-keep, that means subtracting what the car is still worth at the end. Insurance, servicing and fuel apply whichever way you go, so leave them out of the head-to-head. And remember any residual value is an estimate: a real used-car market decides it, not a formula.
A note on the finance itself
PCP and lease agreements are regulated credit and hire products. Blooom shows general information and arithmetic on figures you enter — it doesn't arrange finance or give advice. Your own agreement, and the APR and terms in it, are what count.
Compare it for your own figures
Own, PCP and lease side by side — an illustration from figures you enter.
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This guide is general financial education, not personal advice. Always do your own research, and consider speaking to a regulated adviser for your specific circumstances.