PCP vs HP vs leasing on the UK’s best-selling car: which is best?

Choosing how to finance a car can be confusing. We break down PCP, HP and leasing on the UK’s best-selling car to show which option offers the best value for you.

Choosing how to finance a car can feel more complicated than picking the car itself, especially when you’re faced with PCP, HP and leasing options that all promise different advantages. Each one affects your monthly payments, ownership rights and long-term costs in very different ways, making it hard to know which is genuinely the best deal.

To cut through the confusion, we’ve crunched the numbers on PCP, HP and leasing for the Ford Puma, the UK’s best-selling car, to find out which option offers the best value.

We’ve compared the costs based on a typical three-year ownership period and 30,000 miles of driving, using the example of a 125hp 1.0-litre mild hybrid ST-Line X version.

By the end, you’ll have a clear idea of which route best fits your budget and your plans for the car.

Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.

Leasing

Let’s start with leasing a Ford Puma.

At the time of writing, we found a lease deal on a Ford Puma ST-Line X through Carwow for £243.49 per month over a three-year term with an annual mileage allowance of 10,000 miles. The initial payment is equivalent to 12 monthly payments (£2,921.88), bringing the total lease cost to £11,444.03.

You’ll then need to consider road tax.

For all cars first registered on or after 1 April 2017, you’ll pay a first-year rate based on the vehicle’s CO2 emissions. This rate can be checked using the official GOV.UK vehicle tax tables and may also be displayed on manufacturer or dealer websites. After the first year, most drivers pay the standard annual rate of £200.

In the case of the Ford Puma, road tax would cost £855 over a three-year lease, comprising a £455 first-year rate followed by two years at £200 per year.

However, in the case of the Carwow deal above, road tax is already included in the monthly lease payments. Before adding road tax to your own calculations, check the terms of your lease agreement to see whether it’s included.

One of the biggest advantages of leasing is that you don’t bear the financial risk of depreciation. When you buy a car outright, its value can fall significantly over time. With a lease, the leasing company takes on that risk instead.

That doesn’t mean depreciation is irrelevant, though. In fact, it’s one of the main factors that determines your monthly payments. Lease prices are largely based on the difference between a car’s current value and its predicted value at the end of the agreement, alongside financing and administration costs.

Also keep in mind that you’ll be expected to return the vehicle in good condition. If the car has damage beyond what leasing companies consider fair wear and tear – such as dents, deep scratches, kerbed alloy wheels or excessively worn tyres – you could face additional charges when the agreement ends.

Here’s a breakdown of the costs if you were to lease a Ford Puma for three years with a limit of 10,000 miles per year, acknowledging the fact that road tax is incorporated into the monthly payments:

Monthly payments x35	£243.49
Initial payment	£2,921.88
Total cost to lease	£11,444.03

Personal Contract Purchase (PCP)

Next up, we have PCP finance, a flexible car finance option where your monthly payments cover much of the car’s expected depreciation rather than its full purchase price.

To create a like-for-like comparison with the lease deal, we’ve assumed a deposit of £2,922, a three-year term and annual mileage of 9,000 miles. We used 9,000 miles because Ford’s finance calculator only allows mileage selections in 3,000-mile increments.

The recommended on-the-road price of the Ford Puma is £29,695. After the deposit is paid, the amount borrowed from the finance company would be £18,456 if you return the car afterwards. Monthly payments start at £417.65 in the first month, followed by 35 payments of £417.61, at the time of writing.

This particular deal comes with 0% APR and a 0% fixed rate of interest, meaning you’ll pay no interest on the amount borrowed so long as you stick to the terms of the agreement.

At the end of the PCP agreement, you’ll have the option to make a final payment – often referred to as a balloon payment – of £11,239 to own the car outright, according to the Ford calculator.

Alternatively, you can return the car to the finance company, provided it meets the agreed mileage and condition requirements. In that case, you won’t need to make the final payment, and the total amount paid over the three-year term would be £18,456.

If you add the road tax of £855 (total sum over three years) to this, it would cost you £19,311 to finance the Puma on a PCP over three-years and 27,000 miles. Remember, unlike most car leases, you’d have to consider car tax on top of your monthly payments.

Here’s a full breakdown of the costs of a Puma on PCP at a glance:

Initial deposit	£2,922
First monthly payment	£417.65
Regular monthly payments	£417.61
Optional final payment	£11,239
Road tax	£855
Total cost to PCP with road tax if you keep the car after the term	£30,550
Total cost to PCP with road tax if you return the car	£19,311

Hire Purchase (HP)

Now we move on to HP finance, where you pay an initial deposit and then repay the remaining balance for the full value of the car through fixed monthly instalments. Under an HP agreement, you hire the car until you’ve made the final payment, at which point you legally own the car.

For this comparison, we used the same £2,922 deposit as in our PCP calculations and spread the remaining balance over a 36-month term.

One thing to keep in mind is that HP finance doesn’t typically include annual mileage limits because the agreement is structured around you owning the car once all payments have been made.

Just like PCP, the recommended on-the-road price of the Ford Puma is £29,695. After the deposit is paid, the amount borrowed from the finance company would be £26,273. Because you’re paying off the car’s entire value rather than deferring part of it to a final balloon payment, the monthly instalments are considerably higher than on PCP.

In the case of this Ford Puma HP agreement, you’d pay £729.65 in the first month, followed by monthly payments of £729.81 for the remainder of the term, at the time of writing.

Like the PCP agreement, this HP deal comes with 0% APR and a 0% fixed rate of interest.

The total amount payable would be £29,695, meaning you’ll have paid the full purchase price of the car by the end of the agreement.

This is where things become a little more complicated. Unlike leasing and PCP finance, you need to account for depreciation when calculating the true cost of ownership. Depreciation is the difference between what you paid for the car and what you can sell it for later. The greater that loss, the higher your overall cost of ownership.

In its first year, a new car can lose between 15% and 35% of its value, depending on the model, mileage and market conditions. After that initial drop, depreciation typically slows to around 10% to 15% per year.

Based on valuations from Cap HPI, an automotive data and vehicle valuation specialist, a Ford Puma driven for three years at 10,000 miles per year is expected to lose around £15,700 in value, assuming it’s traded in to a dealer in good condition.

Taking that depreciation into account, along with £855 in road tax over the same period, the total cost of ownership comes to £16,555.

Here are all the numbers for you to look at in one go:

Initial deposit	£2,922
First monthly payment	£729.65
Regular monthly payments	£729.81
Total amount payable	£29,695
Depreciation loss (Cap HPI data)	£15,700
Road tax	£855
Total cost on HP finance	£16,555

Final verdict on costs

When we consider all the factors above, here’s how much it would cost you to own a Ford Puma over three years when you take out PCP or HP finance or lease one:

Type of finance	Monthly payments	Total cost of ownership with road tax
Leasing	£243.49	£11,444.03
PCP finance	£417.61	£19,311 (if you return car)
HP finance	£729.81	£16,555

Our analysis shows that leasing is the cheapest way to drive a Ford Puma over three years and 30,000 miles and comes with the lowest monthly payments out of the three finance options.

The calculations also suggest that you could save around £2,750 over three years in HP finance compared to taking out a PCP loan on the same car.

That said, the significantly higher monthly payments on HP are bound to put a lot of people off. Only seriously consider HP if you can afford those monthly payments, but also bear in mind that this option could save you in the long term.

Another thing to note is that with HP finance, you won’t have to worry about a balloon payment once the final payment has been made, at which point the car legally transfers to your name. You then have an asset worth, in this case, about £14,000 that you can sell or trade in to reduce the cost of your next car.

Ultimately, the right choice depends on how you use your car and whether you plan to keep it long term. But if you’re looking for the cheapest option, then leasing a Ford Puma is really a no brainer.

Car change? Carwow!

Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.

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