Personal Contract Hire Explained

Published 10 March 2023

Personal Contract Hire (PCH) is a type of car leasing in the UK that allows individuals to drive a new car without having to buy it outright. It is a popular option for people who want to drive a new car every few years without the hassle and expense of buying and selling vehicles.

Here’s a comprehensive guide to Personal Contract Hire and how it works:

What is Personal Contract Hire (PCH)?

Personal Contract Hire is a type of car leasing agreement that allows you to use a new car for a set period of time in exchange for a fixed monthly payment. PCH is typically a long-term rental agreement, ranging from 1 to 5 years.

How does Personal Contract Hire work?

With PCH, you’ll choose a new car from a dealer and agree on a set contract length, usually between 1 to 5 years. You’ll also agree on a set annual mileage limit. The leasing company will then calculate a monthly payment based on the car’s value, contract length, and mileage limit. You’ll pay this amount every month for the duration of the contract.

What are the advantages of Personal Contract Hire?

There are several advantages to PCH, including:

• Lower monthly payments compared to buying a car outright
• No need to worry about depreciation or selling the car when the contract ends
• You can drive a new car every few years
• Road tax is usually included in the monthly payment
• You can often include a maintenance package in the contract for added peace of mind

What are the disadvantages of Personal Contract Hire?

There are also some disadvantages to PCH, including:

• You won’t own the car at the end of the contract
• You’ll need to agree to a set annual mileage limit, and excess mileage charges can be expensive
• You’ll need to keep the car in good condition to avoid additional charges when the contract ends
• You’ll need to budget for monthly payments for the duration of the contract

How do I choose a Personal Contract Hire agreement?

When choosing a PCH agreement, consider the following:

• The type of car you want and your budget
• The contract length and annual mileage limit that suits your needs
• Whether you want to include a maintenance package in the contract
• The leasing company’s reputation and customer service record
• Any additional fees or charges that may be incurred during the contract period

In conclusion, Personal Contract Hire is a type of car leasing agreement that allows individuals to drive a new car without buying it outright. PCH agreements typically range from 1 to 5 years and require a fixed monthly payment for the duration of the contract. PCH can be a convenient and cost-effective way to drive a new car every few years, but it’s important to consider the advantages and disadvantages before committing to a contract.