Complete PCP and Lease noob, really dont know much about it and want to learn the benefits and differences in regards to cost of lease vs PCP vs personal loan.
The cost differences are fairly easy to work out once you have the facts and figures.
Leasing: You're renting the car, and essentially paying for the depreciation + a margin for the supplier over the term you are in possession of the car. Generally the most expensive and inflexible means of getting into a new car, although from a cost perspective there are sometimes some very good deals to be had that can make it the lowest cost option.
PCP: You're borrowing the money to buy the car typically from the manufacturer's own financial partner, which will often mean a higher rate of interest than you may be able to secure a bank loan for. The advantage of this method is that, because you're only borrowing the money for a portion of the car's value the monthly repayments are lower than they would be if you borrowed the money to buy outright, and also a personal loan normally will only go up to £25k, so if the car you want is more expensive and you don't have enough deposit it may be the only way you can borrow enough to buy the car you want. The disadvantage is that you don't own the car until you've made all the monthly payments and the final balloon payment at the end. Until then it remains the property of the lender. Again, sometimes there are good deals to be had, and manufacturers will often provide "deposit contributions" granting you access to a larger discount than would otherwise be available. Normally deals for brand new cars are MUCH better than PCP deals for used cars, which are, frankly, a rip-off most of the time.
Bank Loan: Generally the lowest cost means of borrowing money (there are lenders out there right now who will loan up to £20K at 3.3%), but normally the maximum you can borrow is £25K. Advantages of this method are that you will be the owner of the car from day one and the loan is not secured against the car. It gives you the freedom to do what you want with the car, put as many miles on it as you like, etc.
There's another option too.
Hire Purchase: Using this method you are borrowing the whole sum to buy the car and repay the whole amount during the term of the loan. Disadvantage is that the loan is secured against the car, you are not the legal owner of the car until all the payments are made, and interest rates are typically higher than a bank loan. Advantage is that you can borrow enough to buy the car (e.g. £60k) if you don't have a sizeable deposit.
As for which option gives you the lowest TCO that depends on the deal on offer (how much are you borrowing, what is the cost of this borrowing), the car in question and your likely mileage (what are the residuals like). Sometimes leasing, normally the most expensive, can be the lowest TCO option with the right deal.
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