Personal Contract Hire (PCH)
Last, but by no means least, PCH. Personal contract hire applies exclusively to private individuals. When most people refer to the term ‘car-leasing’ they are actually talking about personal contract hire, in essence, it’s a long term rental.
With a PCH agreement, you take control of a car for a fixed period. Though the car is in your possession, it is not actually yours to own. Instead, you make fixed monthly payments to a leasing company for the duration of the contract. When the contract expires you simply return the car to the leasing company and, if you want to, take out a new lease. As a result, you never have to worry about resale values of the car. You never own it, so you can simply return it and walk away.
Advantages of PCH
- It’s Cost effective. Monthly payments are generally lower than a PCP or HP agreement
- There’s no depreciation concerns. You don’t own the car so you don’t have to worry about the resale value
- Fixed monthly payments. There are no concerns around VED (road tax) or interest rate changes
Disadvantages of PCH
- No ownership option – you can never own the car outright
- If circumstance change and you have to change vehicle it can be costly to get yourself out the contract.