Introduction
Personal Contract Hire (PCH), more commonly known as Personal Car Leasing or just leasing, could be the ideal way of getting the new car of your dreams. You pay an initial payment and then pay a manageable monthly payment for a pre-agreed number of months. Then, at the end of the contract, you simply hand the car back.
PCH could be excellent for those who need to stick to a budget, and, as you’ll never own the car you won’t have to worry about depreciation. But it won’t be for everyone. Here we breakdown everything you need to consider, the advantages and disadvantages of PCH, and other finance alternatives.
How Does Personal Contract Hire (PCH) Work? The Mechanics Explained
Our site has easy to use search tools to narrow down your choice by make/model and budget. Once you've selected your car, you can personalise the leasing offer even further – you can tweak your initial payment, how long you want the vehicle (normally 24, 36 and 48 months), and your annual mileage limit.Then, it's a simple case of paying the initial payment, and those fixed payments every month. At the end of the agreement the car will be collected from you, and that’s it.
The Pros and Cons of PCH: Is it Right for You?
Advantages of Personal Contract Hire (Pros)
The main appeal of car leasing is that you can have the latest wheels for a few years, before handing it back and moving on to the next in-vogue model. You also know exactly how much you will be paying every single month, helping you to budget.
As you won't be owning the car, you won't have to worry about depreciation – at the end of the agreement you just hand back the keys. Also, new car leases will be covered by the manufacturer's warranty, so, if something goes wrong you won't be out of pocket. For even more peace of mind, many lease agreements also come with the option of a maintenance package that covers servicing costs.
Disadvantages of Personal Contract Hire (Cons)
One of the biggest advantages of PCH for some customers will be others' biggest disadvantages. Not owning the car brings flexibility, but at the end of the agreement you'll have nothing to show for it.
Something else to bear in mind is mileage. You have to think carefully about how many miles you intend to clock up every year. Go over your mileage limit and you will incur charges at the end of the agreement. The cost per mile is clearly stated in your contract, so ensure you remember this figure. Also, be aware of damage during your time with the car – general wear and tear will be accepted, but silly parking scrapes won't.