What is Personal Contract Hire?
Personal Contract Hire is a simple and straightforward way to drive a brand-new car without the commitment of owning it.
Also known as PCH, this form of finance gives you the option of driving the newest cars with the latest features.
You’ll also benefit from low monthly payments and straightforward contract options, both short and long term.
No matter which kind of vehicle you’re after - or what your budget is - PCH opens up a range of possibilities.
Representative Example (PCP):
Borrowing £19,121.23 over 48 months with a representative APR of 11.36%, the annual interest rate of 6.46% (Fixed) and a deposit of £1,266.23, the amount to finance would be £17,855.70, paying £323.72 per month, with a total cost of credit of £6,194.43, an optional final payment of £8,511.57 and a total amount payable of £25,715.36 (incl. £399 option to purchase fee).
This represents an average of the deals that our customers receive on other vehicles. We are a credit broker and a lender. We can introduce you to a limited number of lenders and their finance products. We will provide details of products available, but no advice or recommendation will be made. You must decide whether the finance product is right for you. We do not charge you a fee for our services. Lenders will pay commission to us (either a fixed fee or a fixed percentage of the amount you borrow) for introducing you to them, this may be calculated in reference to a variable factor such as (but not limited to) the vehicle age, your credit score and the amount you are borrowing. Different lenders may pay different commissions for such introductions. Offers available to everyone over the age of 18, subject to credit approval.
Wondering how a PCH deal works? Here’s what you can expect.
Initial Payment
When proceeding with your PCH deal, you will need to select an initial payment - usually referred to as the Initial Rental. This can be the equivalent of one to 12-times your monthly payment.
The more you pay initially, the less you pay over time, lowering your monthly costs for the vehicle, making the process more manageable.
Contract Length
Select the length of your contract, with options ranging between 12 and 48 months depending on the vehicle and available offers.
This determines how long you will be paying your monthly costs, alongside how high those costs may be. A longer contract term will affect how much you pay each month, so make sure to find the right balance.
Payments
During your contract, you will be required to pay a set monthly payment for the duration selected.
These payments are fixed, so you can rest assured there will be no surprise changes or cost increases during your agreement.
Failing to do so would lead to repercussions which could affect your credit score and potentially increase your overall costs.
Profile
While not vitally important, the profile is a helpful signal of how a PCH contract is structured and is made up of two numbers: how many monthly payments make up the initial rental + the remaining number of monthly payments.
Example: if an offer is made up of six monthly payments as an initial rental followed by 23 monthly payments, you would get a profile of 6 + 23.
Annual Mileage
Similar to a PCP agreement, PCH requires you to identify your predicted annual mileage. Typically starting at 5,000 miles, this will help calculate the total contract mileage.
As more miles put on the car during the contract will increase the rate of depreciation on the vehicle, you will find that the higher your mileage is the more your monthly payments will cost.
Is PCH for Me?
Personal Contract Hire is a great choice for those not wanting the worries that come with ownership.
This is due to PCH agreements not leading to ownership. Instead, they offer a quick and easy solution to switching your vehicle once the term ends.
When it comes to the end of your contract, you simply hand back your car and switch to another.
If you’re enjoying the car you have, however, the option to extend your contract can also be available - though your payments will likely change at this point due to a reassessment of the car and its future value, while other aspects can also affect the availability of this facility.
Although you do not own the car with Personal Contract Hire, depreciation still plays an important role in how your monthly payments are calculated.
Like any vehicle, a car leased through PCH is expected to depreciate over time, and this is factored into the cost of your initial agreement or if you choose to extend your contract.
.png)
Your monthly payments are based partly on the difference between the car’s RRP and its predicted value at the end of the contract. This means you are effectively paying for the vehicle’s use during the lease period, rather than paying towards ownership.
With ownership not factored in, you do not need to worry about its future resale value. Once your agreement ends, you simply return the vehicle, subject to the agreed mileage and condition terms.
Meanwhile, many drivers set their PCH agreements at no longer than two years so that they can benefit from a rotation of vehicles that offer them the latest car tech, keeping them engaged and safe with whatever they choose.
So if you wish to avoid the effects of depreciation and stay behind the wheel of the most up-to-date cars, then PCH is likely an option you’ll want to strongly consider.
What am I Responsible for with a PCH Deal?
Although you do not own the vehicle during the agreement, you will still be responsible for it.
Making sure you book your servicing is key to keeping your vehicle healthy and capable, and this is the same with a car on PCH - those running a car past its third birthday will also need to ensure an MOT is performed when required.
You will also need to pay your insurance, as well as cover any damages caused during your time with the vehicle.
Finally, your mileage is also your responsibility - if you go over your contract mileage come the end of the agreement, you will be charged on a per-mile basis for any excess mileage.
What if I include a Maintenance Package in my PCH contract?
One option while exploring PCH is to consider a maintenance package.
PCH maintenance packages include all your scheduled servicing, wear and tear replacements, tyre replacements, MOT tests (when applicable), and breakdown cover, making for a considerable bolt-on for your agreement.
While this does mean that your monthly price increases upon adding it, you will be covered for so much and removes any burden of large singular costs down the line.
What cars can I get on PCH?
One of the main benefits of choosing PCH is that you have such a varied range of vehicles available to you.
Any new car is eligible for PCH, opening the doors to so many possibilities regardless of what kind of vehicle you need in your life.
For example, our dedicated leasing arm offers a wide range of PCH options for over 30 brands, opening you up to a variety of vehicles, ranging from practical SUVs to compact hatchbacks.
How do I get a car on PCH?
The route to getting a new car on PCH is fairly easy, especially with most manufacturers offering their cars through this option.
All these brands will have their own defined offers for you to consider, but you’ll also be able to piece together your own PCH agreement with the help of any dealer or dedicated team.
All aspects will be considered to set up your contract, such as your initial rental, term and mileage before any order for the car itself is made.
Stock levels and production availability will determine when you’ll receive your car, but your dealer or broker will keep you updated every step of the way.
