Personal Contract Hire (PCH)

Last, but by no means least, PCH. Personal contract hire applies exclusively to private individuals. When most people refer to the term ‘car-leasing’ they are actually talking about personal contract hire, in essence, it’s a long term rental.

With a PCH agreement, you take control of a car for a fixed period. Though the car is in your possession, it is not actually yours to own. Instead, you make fixed monthly payments to a leasing company for the duration of the contract. When the contract expires you simply return the car to the leasing company and, if you want to, take out a new lease. As a result, you never have to worry about resale value of the car. You never own it, so you can simply return it and walk away.

Advantages of PCH

• It’s cost effective. Monthly payments are generally lower than a PCP or HP agreement
• There are no depreciation concerns. You don’t own the car so you don’t have to worry about the resale value
• Fixed monthly payments. There are no concerns around VED (road tax) or interest rate changes

Disadvantages of PCH

• No ownership option – you can never own the car outright
• If circumstance change and you have to change vehicle it can be costly to get yourself out the contract.