What is Personal Contract Hire (PCH)?

We explain the benefits and limitations of using personal contract hire to get behind the wheel of a new car...

BMW Z4 front right static

Personal contract hire (PCH) is, in effect, a long-term rental, and it's ideal if you aren't bothered about keeping the car at the end of the agreement. We also refer to it on our site as a "personal lease". You simply make fixed monthly payments for the agreed period and when the contract ends you return the vehicle.

Here are some positives for PCH, and some things to remember:


- There's no need to worry about reselling your car, because you simply hand it back at the end of the agreement.

- Your monthly payments will be lower than they would be if you were buying the car over the same length of contract.

- Maintenance packages are usually available at an extra cost, and cover you for the servicing of your vehicle.

- You get the opportunity to drive a new car that you may not have been able to afford otherwise.

Car keys being handed over

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- You cannot buy the car at the end of your agreement. If you want to do this then an alternative type of contract would be better for you.

- You agree to an annual mileage limit, and you will be charged an excess charge if you exceed this.

- You are tied into the contract for a fixed term. If you cancel the contract early or make changes, charges may apply.

- Make sure to keep your vehicle maintained to a good standard. There is a fair wear-and-tear guide available which outlines what would be considered as expected under normal usage. However, damage can often result in costly bills if you don't get it fixed. You should familiarise yourself with this at the beginning of your agreed lease to make yourself aware what is acceptable.

So, is personal contract hire right for you? Perhaps, if you don't do too many miles and would like to have a new car every few years.

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