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Personal Contract Hire - Car Leasing Guide
Personal Contract Hire, often referred to as PCH, is a great way for individuals to acquire a vehicle on a VAT inclusive long-term hire basis that is very similar to that of Business Contract Hire.
Personal Contract Hire | Explained
At Egon Car Leasing, we understand the need for you to fully explore whether Personal Contract Hire is suitable for your requirements – with this in mind, it is our mission to make sure that we provide you with all you need to glean a full understanding of this type of car acquisition.
Personal Contract Hire hugely is popular with company car drivers wishing to opt out of their company car schemes across the UK, opting to take a cash allowance instead.
Personal Contract Hire | Frequently Asked Questions FAQ’s
Is Personal Contract Hire right for me?
If you are looking for reasonably priced, fixed-cost motoring that you can tailor to suit your budget and mileage, PCH is a great form of funding. You make the same costs repayment each month on a vehicle of your choice.
The good news is that often, sought-after cars that you may have considered as being out of your price range, have good residual values which result in lower rentals!
Personal Contract Hire gives you the choice to put down a low initial outlay; you can choose your own initial payment and contract term, usually between 24-48 months.
VAT is included within your monthly rental and you can also choose to take out a servicing and maintenance package which often work out very reasonably when considering the bulk discounts that funders secure for their fleets. This effectively takes care of all your motoring costs, except for fuel and insurance.
The first payment – classed as ‘1’ payment – consists of months that are added together, i.e. 3, 6 or 9 months in advance. There is no refund at the end of the contract for these months unless you choose to customise your PCH agreement in this way. The higher the initial payment, the lower your rental will be.
Some clients opt for 1 payment down which is an option, particularly for those of you who have a history of ‘good credit’.
Will Personal Contract Hire penalise me for exceeding the average annual mileage?
In a word, no. Under the terms of a Contract Hire agreement, there will be an excess mileage clause, which sets out excess mileage from the outset. This is charged at pence per mile and is not a ‘penalty’ clause as such – it exists to redress any difference that extra mileage has cost in terms of the resale value of the contract vehicle.
If you settle your agreement early, mileage is calculated pro-rata and if you return the vehicle under-mileage, you do not get a refund for miles not driven.
Many of Egon Car Leasing’s clients do well in excess of the average annual mileage and do not find that the contract hire monthly amount is excessive – in fact, in most cases, PCH is an extremely affordable way of driving a brand new, efficient and reliable vehicle!
Will I get penalised for any damage to a vehicle that is taken out on a Personal Contract Hire agreement?
If you damage a car in a manner that does not fall under ‘fair wear and tear’ and do not repair it as you would with a car that was owned, for example, then you will be invoiced for damage.
If you make repairs to any contract vehicle you can make a claim with your insurance company as you usually would.
Funders do not set out to penalise anyone for damaging vehicles unnecessarily – for full details of what is classed as fair wear and tear and vehicle hand-back procedures, please don’t hesitate to ask one of the team at Egon Car Leasing and we will forward you the documents appertaining to your chosen finance company.
Can I terminate a Personal Contract Hire agreement early?
If you do not feel that you are able to commit to the term of the contract, we would not recommend PCH as the ideal agreement for you. Perhaps PCP or finance would be more suitable, in which case please chat to us about these methods of funding and we will be happy to help you secure a great value deal.
The reason for this is that it is usual that no rebates are due if you want to hand the vehicle back before you are 12 months into the agreement. After this time, settlement rebates may be available – often there is between 20%-50% discount on the outstanding rentals plus outstanding excess mileage. This, however, is not always the case and may vary from funder to funder.
Please refer to your agreement and don’t hesitate to ask us if you have any queries prior to signing, as early termination could prove costly.
What is the difference between Personal Contract Hire and leasing and is it different from PCP?
Personal Contract Hire is often be referred to as (Personal) Leasing. Although this is a popular reference, a vehicle leasing agreement is not quite the same as Personal Contract Hire.
Vehicle lease agreements are not available to personal users in the U.K. – Finance Lease Is available to Business Users only.
Individuals can enter into a Lease purchase or PCP agreement, however. This is a VAT inclusive finance agreement, working on the same kind of principals as a lease agreement but it is a regulated (or unregulated) finance agreement by the Consumer Credit Act 1974.
How will Egon Car Leasing protect my personal data?
Your information is only used to help us provide you with information about our services and to keep our records up to date.
You are entitled to request a copy of the personal information we hold about you and we will not disclose your personal information outside Egon Limited without your permission to do so. However, we may supply information to Police forces and central government if required to do so, in full compliance of the Data Protection Act.