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Personal Contract Hire (PCH)

Lease purchase is a form of long term rental which is perfect for those who know they will be looking to move on to another vehicle once the agreement period is over.

Working in a similar way to Personal Contract Purchase (PCP), the main difference is that ownership of the vehicle would not be assumed at the end of the agreement period and instead the vehicle would be handed back without any further obligation.

However another vehicle could then be chosen under the same scheme (subject to credit checks). This enables maximum flexibility with your choice of vehicle and the benefit of driving a brand new vehicle every few years.

When the Agreement Starts

  • The amount you want to borrow, less any deposit payment is agreed.
  • Your application for finance is then submitted to the relevant motor finance company and, when you pass their checks, the lender will pay for the vehicle on your behalf.
  • Your monthly payments are fixed during the period of the agreement.

When the Agreement Ends

  • You return the vehicle to the dealership with no option to buy the vehicle - hand back the keys with no further obligation.
  • Use the vehicle as a trade in by using any existing equity (if of course, the guaranteed future value is lower than the current market value of the vehicle) as a deposit for a new finance agreement. You may choose a completely new brand of vehicle at this stage.

Advantages of Personal Contract Hire

  • There are several advantages when considering a PCH plan.
  • It's a low risk option as the vehicle can be driven away without the worry of a warranty expiring or worry about the best way to re-sell it in future.
  • Monthly payments would be more favourable than compared to HP
  • It offers flexibility as the vehicle can be easily changes at the end of the agreement period, with access to a wide range of vehicles which, under normal circumstances, could not be afforded.

Things to remember

  • It is best to be realistic about annual mileage as there will be a charge for each additional mile covered
  • There is no option to buy the vehicle at the end of the period.