Personal Contract Hire

How it works

Personal Contract Hire (PCH) gives the user a fixed equal monthly rental for a fixed contract term and mileage. At the end of the contract the vehicle is simply handed back.

Who uses it.

Company car drivers who are given a car or mileage allowance instead of company vehicle. It allows the individual to make his/her own choice and arrangements. This will avoid benefit-in-kind taxation.

Who takes the Risk

The funder assumes the risk of the residual value of the vehicle.

What are the Advantages

Low initial outlay

More tax-effective than a Personal Contract Purchase (PCP) if the vehicle is used partly for business use

The contract is not subject to a final balloon payment

The contract includes road fund licence at the current rate for the complete term of the agreement

Maintenance of the vehicle can be included as an option

What are the Disadvantages

Contract Hire agreements are for a fixed term and to terminate early will require a final one-off settlement payment.

It is important to correctly assess your annual mileage as an excess mileage applies at the end of the agreement. It may however be possible to reschedule your mileage during the contract if you incorrectly estimate it, or your circumstances change

To sum up

Overall, a convenient and hassle-free funding method with possible tax advantages ( ask you tax adviser for more information ).