What is personal contract hire (PCH)?
Personal contract hire (PCH, also known as personal leasing) is a long-term vehicle rental agreement.
It is a solution for private individuals and is becoming an increasingly popular alternative to purchasing brand new vehicles among car users.
You pay to ‘rent’ the vehicle throughout the duration of your contract, and then return the vehicle at the end of the agreement, leaving the finance company to worry about depreciation values and disposal of the car.
How could PCH work for you?
If you choose to lease a car on a personal contract hire basis, you will make a series of monthly payments for the duration of your lease agreement (24 or 48 months, for example), having already paid an initial rental.
You pay for the use of the vehicle throughout your contract, and then return the car to the finance company at the end of the agreement without any further obligations, leaving you free to lease or purchase another vehicle.
In some cases (subject to approval from the finance provider), you may be able to extend the vehicle contract.
What is business contract hire (BCH)?
Business contract hire is a popular long-term vehicle rental agreement suitable for sole traders, partnerships and limited companies.
It’s a particularly popular option for VAT registered companies, as they can claim back 50% of the VAT for the supply of the vehicle.
How could it work for your business?
If your company leases a vehicle on a contract hire basis, you will pay to rent the vehicle in monthly instalments for a contract of 24 or 48 months, for example. Once the contract is up, the vehicle is returned to the leasing provider, leaving them to worry about depreciation values and disposal of the car.
Contract hire means your company can concentrate on its core activities, while avoiding the financial risk and administrative burden of owning your vehicle or fleet.