As the name suggests Personal Contract Hire in the UK (also known as personal leasing) is simply contract hire but for individuals.
Personal Contract Hire (PCH) is based on a fixed term contract where customers pay an agreed monthly charge for the use of a vehicle for a previously agreed period.
Personal Contract Hire (PCH) is a fixed term and mileage-based agreement for the hire of a car for a period usually between 2 and 5 years. It is important that your agreement reflects your predicted annual mileage. The vehicle will not belong to you at any point in the agreement and so you cannot sell the vehicle. With a PCH agreement you pay an initial rental followed by an agreed number of fixed monthly rentals and all rentals are inclusive of VAT at the prevailing rate for the specific period of hire you have chosen. At the end of the agreement the vehicle must be returned to the contract hire company.
PCH car leasing may be a poor choice if you wish to own or buy the vehicle at the end of the contract term. It's also inefficient if you might need to change your vehicle early; as early termination of the agreement will incur signidficant extra charges. If you would like to shorten your period of hire by pre-paying. If you are unable to predict your mileage. If you plan to export the vehicle or use abroad for extended periods.
PCH leasing a vehicle has a number of advantages in the right circumstances. Low initial outlay and fixed monthly rentals are the obvious benefits. Choice of period of hire from 2 to 5 years and choice of mileage (minimum and maximum apply). Whilst the contract is based on a fixed mileage, you may be able to reschedule your agreement if your predicted mileage changes. For peace of mind motoring optional maintenance plans are available, for an additional fixed monthly fee. Road Fund Licence is included for the duration of the agreement, though charges may apply reflecting future increases in RFL costs. At the end of a vehicle leasing PCH contract, the vehicle is simply returned, removing concerns about disposal values and depreciation.
Vehicle leasing personal contract hire finance arrangements benefit customers wishing to eliminate the financial risk associated with disposing of a vehicle. Contracts are usually taken over two, three or four years, providing a high level of flexibility. Some contracts can be formally extended beyond the end of contract date if required. Check our growing list of Frequently Asked Questions or just ask and we can answer any of your questions regarding extending your contract.
PCH is very similar to business Contract Hire; both are based on a fixed annual mileage agreed on inception of a contract. You will need to decide how many miles you drive each year before quotations can be obtained. Once you have stated how many miles you drive in a year and considered which vehicle you would like to lease a quote can be created for you by one of our sales team.
Regulations with regard to making mileage amendments after contracts are live, vary from funder to funder, so it is always better to be as accurate as you can be. If you do exceed the agreed allowance at the end of your contract you will pay an excess mileage charge, which will have been agreed upon prior to signing the finance agreement.
Please remember this when deciding upon you annual mileage. If you are looking to have predictable motoring costs adding maintenance to your monthly payment is easy. Maintenance is there to put your mind at rest should any challenges arise with your vehicle and generally covers servicing, routine maintenance, tyres, exhausts and batteries.
Please note that it is responsibility of the person named on the finance agreement to arrange and pay for fully comprehensive insurance for the vehicle. It is important that the vehicle is returned in accordance with the guidelines set out in the ‘Fair Wear and Tear Guide’, a copy of which is made available to customers when they are near the end of their PCH agreement.
Personal contract hire lease vehicles have to be looked after physically and legally. You must ensure that the vehicle is always comprehensively insured. You must pay any additional charges that you incur for example a parking fine or congestion charge on time. If you don’t, the cost and/or fine will be issued to the finance company who will invoice this to you together with an administration charge that they will levy. You must have the vehicle serviced and maintained by a main franchised dealer in accordance with the manufacturer’s recommendations and keep it roadworthy. If you do not service and maintain the vehicle, the funder will make a charge when the vehicle is returned as this will affect its value. You may add a cost-effective maintenance package which will cover routine servicing, maintenance costs and tyres, subject to fair wear and tear plus breakdown assistance to enable easy budgeting and give you fixed cost motoring. If you include a maintenance package please note the funder may decline to settle any charges if the total mileage on the agreement is exceeded. At the end of the agreement the finance company will assess the vehicle condition based on the standards set down in the British Vehicle Rental and Leasing Association’s fair wear and tear guide. Refurbishment charges may apply if the condition is not satisfactory. If you exceed the total contract mileage you will be charged at the pence per mile as detailed in your agreement for the over mileage. When the vehicle is returned, it must have all items that were present when it was delivered for example, all keys, the locking wheelnuts. If any items are missing, you will be charged for the replacement. Failure to make payments in full and on time may result in the contract being terminated and the vehicle repossesed. Only enter in to an agreement if you are comfortable with the financial commitment and terms.