Personal contract hire (PCH, also known as private leasing) is a long-term vehicle rental agreement. It is a solution for private individuals and is becoming an increasingly popular alternative to purchasing brand new vehicles among car private individuals.
You pay to ‘hire/rent’ the vehicle throughout the duration of your contract, and then return the vehicle at the end of the agreement, leaving the finance company to worry about the disposal of the car.
Would PCH work for you?
If you choose to lease a car on a personal contract hire basis, you will make a series of monthly rentals for the duration of your lease agreement ie: 24, 36 months etc having already paid an initial rental.
You pay for the use of the vehicle throughout your contract, and then return the car to the lease company at the end of the contract without any further obligation.
Key features of Personal Contract Hire:
- PCH is the most popular form of personal car leasing.
- Fixed monthly rentals cover the rental of the vehicle, plus any maintenance options if opted for.
The monthly rentals are calculated by taking the following information into consideration:
- The cost of the vehicle.
- The contract term.
- Estimated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the term).
- Mileage allowance (as decided by you at the start of the contract).
- Any additional options, such as a maintained contract.
- You never own the vehicle – it remains the property of the lease company.
Key benefits of PCH:
- Low initial rental.
- Fixed rentals for the whole term, making budgeting easier.
- Maintenance of vehicles can be included in the monthly fees, spreading the cost.
- Allows you to use a vehicle that might otherwise be unreachable in terms of its on-the-road (OTR) cost.
- When returning the vehicle at the end of your agreement, you do not need to worry about its disposal.
Things to consider before taking out a PCH contract:
- Early termination can be expensive.
- If you exceed your agreed mileage, an excess mileage charge will be payable, worked out on a 'pence per mile' basis as set at the start of your contract.
- You must return the vehicle in a well maintained condition. Any damage over and above that stated in the Fair Wear and Tear Guide will be chargeable.
- Vehicle must be insured fully comprehensive.
The small print *
All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future.
Vehicles are inspected before collection and end-of lease charges occur when the vehicle, its equipment or accessories are not used, maintained or looked after as originally agreed at the start of the lease. The charges compensate the leasing company for the cost of rectifying damage or missing items such as keys or service history.
You are not charged at end of lease for any refurbishment that arises from normal wear and tear.
You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.