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Personal Vs Business Contracts Explained

Business Contract Hire – (Business Car Leasing, Car Leasing, Business Lease Car, BCH)

Business Contract Hire (BCH) is the method that businesses can finance their vehicles with a minimum down payment and an agreed mileage for the contract. The minimum payment on business contract hire is normally 3 payments in advance however this can be as low as £99 or as high as 9 payments upfront depending on the deal taken.

Deals are normally calculated over a 2 year or 3 year period these deals would be advertised as 3+23 or 3+35 contracts, this works with 3 payments in advance then 23 payments or 35 payments over the rest of the term.

Mileage allowance is agreed in advance and the minimum is normally 10,000 miles per annum and maximum is normally 40,000 per annum. Mileage over and above the agreed amount is charged at an excess mileage rate. This rate will be billed at the end of the contract.

Business Contract Hire is subject to Vat of which 50% can be reclaimed often called blocked vat. At the end of the agreed period the car is returned to the finance company. Please be aware that any damage must be repaired prior to return, or this will be charged in addition to the contract.

We recommend businesses consult their accountant to explain in full the benefits of Business Contract Hire (BCH).

Personal Contract Hire – (Personal Car Leasing, Personal Lease Car, PCH)

Personal Contract Hire (PCH) is very similar to business contract hire with the exception of being able to reclaim the blocked VAT.

Personal contract hire prices should always be displayed including VAT, the deals on personal car leasing work along the same format as business contract hire with a 3 payments upfront format then 23(2yrs) or 35(3yrs)  payments over the remaining term.

Mileage is again agreed prior to the contract start and will be normally a minimum of 10,000 Miles per annum, and maximum of 40,000. An excess mileage will be charged for any mileage over and above the agreed limit, this will be billed at the end of the contract.

Personal contract hire is not PCP which is a different type of agreement although very similar.
Personal Contract Hire denotes that you must return the car back to the finance company at the end of the agreed contract. Any damage must be repaired or will be charged in addition to the contract.


The vehicle with regards to both business contract hire and personal contract hire will belong to the finance company and registered to the finance company, you will be the registered keeper of the vehicle.

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