Unlike Personal Contract Purchase and Hire Purchase, Personal Contract Hire is solely a form of leasing that is available to individual buyers.
With a Personal Contract Hire, leasing customers will simply need to pay fixed monthly payments that have been calculated based on the expected depreciation of their chosen model.
The calculated depreciation is the difference between the purchase price of the model and its resale value at the end of the agreement. The resale value takes into account the vehicle’s age and mileage.
If the chosen vehicle can hold its value better then the monthly payments of the customer will be lower. For this reason, leasing a more prestigious car is much easier than if you were to purchase one outright.
With a Business Contract Hire, a company simply pays a car finance company a fixed monthly amount in order to lease a vehicle for a fixed duration.
The monthly payments are calculated based on the vehicle’s expected depreciation. A vehicle’s depreciation is the difference between its purchase price and resale value at the end of the leasing period, taking into account its age and mileage.
Depending on the finance company being used, servicing and maintenance costs may be included into the leasing agreement.
At the end of the contract, the leased vehicle is returned to the finance company. An extension can be negotiated but this depends on the company that is providing the vehicle for leasing.