Personal Contract Hire

Personal Contract Hire

Personal Contract Hire is essentially a long term rental agreement. You make monthly payments based on the cars list price, your mileage, and residual value (how much the car will be worth at the end of the agreement).

At the end of the contract you simply hand the keys back, then either walk away or take delivery of something new.

Usually there are big discounts available on the list prices of cars to be leased. Therefore the monthly payment is usually lower than the normal depreciation if you were to buy the car outright or take a Hire Purchase agreement out.

So in a nutshell, it’s a very cheap way to keep a car for 1,2,3 or 4yrs!

Personal Contract Hire, generally carries the following main benefits:

Low capital outlay – normally 3 payments upfront (so if your monthly payment is £100, the initial payment would be £300)

Fixed Costs – The rentals for the vehicle do not go up throughout the contract, except in extreme circumstances.

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Road Tax Included – for the duration of the contract

No Responsibility For Depreciation – this is the main one, you dont carry any responsibility for the vehicles depreciation.

The cons would be as follows:

You never own the vehicle – although you can request a purchase figure, this isnt written into the contract at the start.

The vehicle needs to be returned in fair condition – you can refer to the BVRLA Fair Wear and Tear guide in our downloads section.

Other things you will need to consider with PCH is the following.

Maintenance – is it worth taking out a Maintenance Contract?

Insurance – some insurance companies do not like leased vehicles

Fuel – Not Included!

This document was updated 23/12/2008 due to the high amount of traffic this document receives. If there is anything you think should be here, that isn’t please do not hesitate to let us know.