Personal Contract Hire (PCH) also known as Personal Car Leasing

A personal contract hire is a form of vehicle finance for individuals who wish to lease a car or van rather than make a purchase.

A personal contract hire deal (PCH) requires the consumer to pay a fixed amount of money for a set contract period of somewhere between 24 to 48 months giving them the right to drive a vehicle, car or van while ownership is retained by the funding company.

Personal contract hire is similar to contract hire or car leasing; however in this case the individual customer’s monthly payments must include VAT.

In some cases when the vehicle actually costs more to buy, the personal contract hire rental for a more expensive vehicle can be less, due to the method of setting a contract hire rental. This is often due to the different depreciation rates of vehicles.

Generally with a personal contract hire the initial payment is usually three months rentals in advance followed subsequent monthly payments, payable by direct debit. Alternative deals may be offered where the initial payment may be more than three months sometimes six months in advance to lower the monthly costs and providing better budgeting to suit the individual.

Personal contract hire means no benefit in kind if you are opting out of a company car scheme.

At the end of the personal contract hire there are no disposal worries as this is the responsibility of the leasing company who are the owners of the vehicle.

With personal contract hire just like business contract hire the leasing company can recover the VAT on the vehicle purchase. This reduces the vehicle costs to the consumer which is reflected in the rental.

A personal contract hire is a binding agreement between the individual and the leasing company and any early termination of such an agreement may incur a penalty charge.

For more information on this topic call 1st4 contract hire on 0844 561 7199 for a free consultation about personal contract hire.