Personal Contract Hire
- No hassle of ownership
- New & used cars
- Dealer & private sales
- All credit ratings
- Rates from 7.9% APR
- Rep. APR 20.7% APR
What is Contract Hire?
Personal Contract Hire (PCH) is a very cost-effective way to get and use a new car. You’re paying to use the car rather than to eventually buy it. The monthly costs only have to cover the car’s depreciation and not the whole purchase price. It means you get to use a new car without the full cost of ownership.
We’ve teamed up with CarFinance 247 to find you great deals on your next PCH contract. They’re the UK’s leading PCH car finance broker and rated extremely highly by customers.
How Personal Contract Hire (PCH) Works
Personal contract hire (PCH) is effectively long-term car rental – you pay for the use of the car but you never own it.
You commit to hiring the car for a fixed period (two to four years). You an initial rental charge (often 3 months) and then simply pay a fixed monthly fee.
While you run the vehicle you are the vehicle’s keeper (but not the owner) and as such you will have to insure comprehensively. Road tax should be included in the monthly rental fee. You must look after the vehicle – if you return it damaged you will face the costs of repair.
However, since the car is likely to be new, you will not have to worry about the car going out of warranty – any problems with the car will typically be dealt with at no cost to you.
Pros & Cons of Contract Hire:
- Monthly payments will be lower than if you buy the car outright (e.g. on an HP deal)
- You could afford a new car of a better brand than you might otherwise
- At the end of the contract, you simply hand the car back
- You must take out comprehensive insurance
- You must agree on a maximum mileage – if you exceed it you will have to pay an excess of 10-12p/mile
- You must cover the cost of any repairs for damage that is not simply wear and tear
- You’ll never own the car – if you want the option to buy it at the end of the contract then consider PCP
How to Choose the Right Contract Hire Finance Deal
Our associate CarFinance 247 is one of the UK’s leading car finance brokers. We’ve teamed up with them because they offer excellent service (a 4.6/5 rating on Trustpilot) and share our values. Their service extends beyond simply finding your contract hire finance. They have an approved network of dealers you can use if you wish, and regardless of where you find your next vehicle, they will check its history and value for your peace of mind. And they do not charge any fee! Aged 17 to 21? Then consider Marmalade’s “cars for young people” car finance.
4: Get on the road
Once the lender has approved your application CarFinance 247 will pay the dealer for you and all you need to do is collect the car!
OTHER TYPES OF CAR FINANCE
Car finance covers a variety of financial products that enable you to buy a car. In addition to Personal Contract Hire there are other options you may wish to consider. Click on the products you want more information about or compare them side by side.
Which type of car finance product may best suit your needs?
Car Finance Loans Guide
If you’re uncertain which type of credit might suit you or you have a money problem then one of guides may help you. We summarise each type of loan and their pros and cons, and address issues regarding debt and credit ratings.
Got a Question about PCH Car Finance?
Answers to Common Questions
Please note: this information is for guidance only. You should clarify the terms of the loan with the lender before entering into an agreement.
If you want a new car and have no interest in ever owning it then personal contract hire (PCH) could be for you. PCH is the long term rental of a vehicle. The period is often two to four years although it could be even longer. PCH is car leasing by another name.
As ownership of the car is not part of the arrangement the monthly costs are lower than an equivalent HP deal and probably PCP deal too. The monthly rental typically includes road tax but not servicing/maintenance or comprehensive insurance.
Personal contract hire is long term leasing of a vehicle. Typically the deal will be over a period of two to four years. You make an initial rental payment (often equivalent to three months) and fixed monthly payments thereafter. These payments continue for the period of the contract and then you simply hand the vehicle back. If you exceed the maximum mileage agreed for the contract period then you will pay an excess charge of x pence/mile. If there is damage to the vehicle beyond normal wear and tear and you have not repaired it then you will be charged.
The monthly PCH charge will cover the depreciation of the vehicle, interest on the total credit provided, wear and tear, and the road tax. It will not include the necessary comprehensive insurance because this will vary enormously by customer. It won’t ordinarily include serving and maintenance, but if this is important to you then it may be something you can arrange to add in when you get your quote.
Both PCH and PCP are forms of long-term car lease. Whereas with PCH you must hand the car back at the end of the agreement PCP gives two additional options:
- Make a final balloon payment to buy the car from the finance company
- Use any equity left in the old vehicle as a deposit on a new one in a new PCP contract
So, PCP is about keeping your options open until the last minute. This does though come at a higher monthly rate. If you know for certain that you will never want to own the car then a PCH deal may well prove more cost-effective.
PCP and PCH have many similarities because they are both forms of car leasing. One is not fundamentally better than the other. The one you need will depend on:
- whether you know for certain that you don’t ever want to own the vehicle you’re driving – if you might then you’ll want to opt for PCP
- whether you want the lowest absolute cost for using a car. If you do and you don’t ever want to own it, then you’ll probably focus on PCH
You are much more likely to be able to get a PCH deal on a new car than a used one. And even if you can get one on a used car you may find that a deal on a new car is actually better value. However, if the used car route is definitely the one you want to follow then our partner, CarFinance 247, may well be able to help you out.
Yes, probably, but you’ll pay a higher rate of interest on the credit extended to you. If your credit rating is very poor then you may find the best chance you have is to use the hire purchase route as this gives the lender more security. Find out more.
If it were an HP or PCP deal then the answer would be yes subject to some conditions. However, for a pure car lease like a PCH deal ending your contract early could be very expensive. It may require you to pay off the remaining lease costs in full! So, be extremely careful before deciding to do this. If you are having payment problems then the best thing to do is discuss it with your finance company. They may be able to revise the terms to help with the size of the monthly payments even if this means extending the agreement.
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