Personal Contract Hire (PCH) Definition
Welcome to the Personal Contract Hire page. We hope that the following helps you understand what Personal Contract Hire is and whether it could be the most suitable purchase method for you.
What is Personal Contract Hire(PCH)
Personal contract hire is car leasing or, in effect, long term car rental. You pay regular monthly payments for the term of the PCH contract but at the end of the contract you return the car to the supplier - the car is never owned by you. Personal contract hire is available to private individuals - if you are a company looking to lease a car you should look at business contract hire.
- Term - the term of the PCH contract is up to you although usually will be in 6 or 12 monthly increments.
- Annual mileage – you have to provide an estimate of the annual mileage you expect to cover for each year of the PCH contract term.
- Deposit – you will be asked to pay an initial deposit. This will generally be a multiple of the monthly payments.
- Maintenance – whether you want servicing, road tax etc to be included in the agreement.
How it works
The finance provider will project the guaranteed future value of the car. This projection takes into account the age of the car at the end of the fixed PCH contract, the annual mileage you estimate at the time of quotation and the projected market value.
Your quotation is then calculated and you pay a fixed monthly amount for the duration of the PCH contract term, although there maybe fees added to the initial and final monthly payments. Cancellation fees will also apply.
A PCH agreement can include servicing and maintenance throughout the term of the contract.
Personal contract hire (PCH) was traditionally popular amongst company car drivers who opt for a car allowance instead of a company car. They have a fixed monthly budget to spend and want to change their car fairly regularly. With the option to include maintenance and servicing cost, PCH is a very attractive and hassle free option. As you never own the car, you do not experience the headache of selling - once the contract expires, you simply hand the car back to the supplier and take out a contract on your next new car.