A brief explanation of what Personal Contract Hire (PCH) is and why it might be a viable option for your next vehicle purchase.
Personal Contract Hire (PCH), also known as personal car leasing, offers a way to drive a car for a set period, typically lasting two to five years. It functions like a long-term rental, with some key points to consider:
Ownership vs Renting: Unlike car ownership, PCH doesn't grant you ownership of the vehicle. You're essentially renting it from a leasing company for the agreed term of the contract.
Fixed Monthly Payments: Throughout the contract, you'll make fixed monthly payments. These are calculated based on the car's depreciation (decrease in value) over the lease period, along with road tax and the leasing company's profit margin. An initial upfront payment, similar to a deposit, can be used to bring down your monthly payments.
Mileage and Maintenance: PCH contracts come with a set annual mileage allowance. Exceeding this limit will result in excess mileage charges at the lease's end. You're responsible for maintaining the car in good condition, with servicing usually not included. Some deals offer maintenance packages for an additional cost.
The Lease End: When the contract concludes, you simply return the car to the leasing company, assuming it's in good condition. There's no option to purchase the vehicle at this point. You're then free to choose another car to lease if you prefer.
This approach can be attractive if you enjoy driving a new car every few years and don't want the hassle of selling a car or dealing with depreciation. However, it's important to remember that you won't own the car at the end of the lease.