Is ownership dead? Why you might be better off renting your next car


We British think of ourselves as a nation of homeowners, but the truth is that we are a nation of owners, full stop.

Owning, rather than renting, gives a sense of security that appeals to the British psyche, and this is as true of cars as it is of houses.

But could that be about to change? As the population is forced towards renting a home rather than buying it, could the same shift be happening into car ownership?

Normally, buying a car means paying cash upfront, either from savings or a loan, or entering into a hire purchase or contract hire deal that means you pay off the full value of the vehicle, plus interest. Hire purchase deals eventually mean you own the car outright.

But a new breed of financing offers an intriguing alternative. PCP, which stands for “‘personal contract purchase”’ or “‘personal contract plan”’, is a loan based on the car’s projected value at the end of the deal, rather than at the beginning.

This means the monthly payments (which include interest) are lower, typically allowing you to drive a pricier car than you’d otherwise be able to afford.

The borrower puts down a deposit, usually 10 per cent, and agrees with the dealer how much they expect the car to be worth at the  end of the loan period, which usually lasts two to three years.

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