Personal Contract Hire

Personal Contract Hire (PCH) is essentially the same as regular Contract Hire for a business, but it applies exclusively to private individuals. It's the most popular form of personal car leasing in the UK.

With PCH you hire a car for a contractual period – usually referred to as the ‘lease period’. Though the car is in your possession, it's not actually yours to own. Instead, you make fixed monthly payments to a leasing company for the duration of the contract – and when the contract expires you simply return the car and take out a new Personal Contract Hire lease.

As a result you never have to worry about the re-sale value of the car – because you can simply return it and walk away.

Fixed cost motoring

You can hire new cars at fixed prices and not have to worry about interest charges because your monthly rental remains fixed for the duration of the agreement. It's the leasing company who have to worry about service and maintenance costs, so it can really help you budget.

Cost effective

The monthly instalments for a Personal Contract Hire agreement will generally be lower than those of a personal loan because the instalments do not include the residual value of the vehicle and simply cover depreciation, finance and maintenance costs. Although your monthly rental attracts VAT, you have to remember that the leasing company can recover the VAT on the purchase of the car, so instalments are lower than you might expect.

Road fund licence

Vehicle Excise Duty will be included in the agreement for the duration of the hire. Indeed, if you have ordered a replacement vehicle the leasing company will normally allow you to extend the current vehicle while you wait on your new one arriving. If so, they will take care of VED (and MOT) for the extension period.

Maintenance

Most Personal Contract Hire deals will include full maintenance, so you don’t have to worry about the general upkeep of the vehicle. Maintenance cover will tend to include servicing, unplanned mechanical faults, roadside emergency recovery and tyres. Damaged items will normally still be payable by you, but in general, you are protected from any unexpected repair costs or rises in maintenance bills.

No depreciation concerns

At the end of the agreement, you simply return the car, so you don’t have to worry about its depreciation and you don't have any hassles trying to sell it.