• Personal Contract Hire (PCH)

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.