Personal Contract Hire (PCH) is a popular car leasing choice in the UK, it offers you the chance to drive a new car every few years without the complications and costs that owning a vehicle can bring.
This guide provides a detailed overview of how Personal Contract Hire works and its benefits and drawbacks.
What Is Personal Contract Hire (PCH)?
Personal Contract Hire is a car leasing arrangement where you can use a new vehicle for a set period in exchange for a fixed monthly payment. Typically, these contracts span from 2 to 4 years, making PCH a long-term rental agreement.
How Does Personal Contract Hire Work?
If you decide that a PCH agreement is for you, you’ll have the opportunity to select a new car from a dealer and agree on the contract’s duration. You’ll also agree on an annual mileage limit. The leasing company will then determine your monthly payments based on the car’s value, the length of the contract, and the agreed mileage. You’ll make these payments each month for the entirety of the contract. You can find out more about the process here.
Advantages Of Personal Contract Hire
PCH offers many benefits, including:
Lower Monthly Costs: Compared to purchasing a car outright, the monthly payments are generally lower.
No Depreciation Worries: You don’t have to worry about the car’s resale value or selling it at the end of your contract.
Regular Access To New Cars: PCH allows you to drive a new car every few years.
Access To The Latest Safety Features: Alongside having access to a range of new cars you’ll also be able to take advantage of the latest safety features.
Road Tax Included: Road tax is often included as part of the PCH agreement.
Optional Maintenance Packages: You can opt for a maintenance package for added convenience and peace of mind.
Disadvantages Of Personal Contract Hire
However, PCH also comes with some drawbacks:
No Ownership: You won’t own the car when the contract ends.
Mileage Restrictions: There is a set annual mileage limit and exceeding it can result in costly penalties.
Condition Requirements: The car must be kept in good condition to avoid additional charges at the end of the lease.
Ongoing Monthly Payments: You’ll need to budget for monthly payments throughout the contract term.
Choosing A Personal Contract Hire Agreement
When selecting a PCH agreement, it is worth considering:
Car Type And Budget: Ensure the car and payment plan fit your budget and lifestyle.
Contract Length And Mileage: Choose a duration and mileage limit that suit your needs.
Maintenance Options: Decide if you would like to include a maintenance package in your agreement.
Leasing Company Reputation: Research the leasing company’s reputation and customer service.
Additional Fees: Be aware of any potential extra costs that may arise during the contract.
Leasing With Bad Credit
If you’ve been turned down for car leasing because of your credit history, don’t despair! Companies like Compass Vehicle Services Ltd specialise in leasing cars to people with poor or no credit, as cost-effectively as possible.
To learn more about Compass Vehicle Services Ltd and get in touch, visit their website at www.cvsltd.co.uk.
Final Thoughts
Personal Contract Hire is a type of car leasing agreement that allows individuals to access a new car without buying it outright. PCH agreements can typically range from 2 to 4 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. However, it’s important to weigh the pros and cons and thoroughly understand the terms before signing up for a PCH agreement.
