Leasing & Finance · 5 min read

PCH vs PCP for an electric car: which finance product suits you?

PCH is a straightforward long-term rental. You pay a fixed monthly amount for an agreed term and mileage, then hand the car back. You never own the car. PCP looks similar on a monthly basis but includes a large optional final payment — the Guaranteed Minimum Future Value (GMFV) — which gives you the choice to buy, part-exchange or hand back at the end.

Personal Contract Hire (PCH)

PCH suits drivers who want predictable costs, no ownership risk and a fresh car every two to four years. Because the car never appears on your balance sheet, it is simple to budget. Maintenance packages can be added to cover tyres and servicing. At the end of the contract, you hand the car back — if it is within the agreed mileage and in reasonable condition, there are no further costs.

Personal Contract Purchase (PCP)

PCP is technically a hire purchase product with a deferred balloon payment. Monthly payments are lower than HP because you are only financing part of the car's value upfront. At the end, you have three options: pay the GMFV and own the car, use any positive equity as a deposit on a new PCP, or hand it back. PCP suits drivers who want the flexibility to own or who want to trade up while keeping payments low.

EV-specific considerations

EVs have historically depreciated faster than petrol equivalents, though this is narrowing as demand for used EVs grows. For PCP, the GMFV represents the lender's forecast of residual value — if the real market value is lower at the end, you carry that risk if you want to buy. PCH removes this risk entirely, which is why it is popular for EVs where residual values are still settling.

Comparing deals

Always compare the Total Amount Payable (TAP) rather than monthly payment alone. A low monthly payment with a large deposit can mask a poor overall deal. The Annual Percentage Rate (APR) must be disclosed — compare this across providers.

Not sure which product suits your situation? Our advisers can explain the numbers via WhatsApp.

Frequently asked questions

What happens if I exceed the mileage limit on a PCH?

You pay an excess mileage charge, typically 5–10p per mile. Agree a realistic mileage allowance at the start — increasing it mid-contract usually costs more than setting it correctly from the outset.

Can I modify a leased EV?

In most cases, no. The car must be returned in standard condition. Removing third-party accessories before return is usually required.

Is PCP better than PCH for an EV?

Neither is universally better. PCH gives simpler fixed costs with no residual value risk. PCP gives optionality to own or trade. For EVs where residual values are uncertain, PCH is often preferred by drivers who prioritise cost certainty.