What is Personal Contract Hire (PCH)?
A Personal Contract Hire (PCH) agreement is an operating lease product offered through
a Leasing Company to non-business customer’s under which the Leasing Company accepts
responsibility at a fixed cost for depreciation, funding costs, administration (and
maintenance if requested).
It is regulated by the Consumer Credit Act 1974 and as amended.
Under PCH vehicles continue to be owned by the Leasing Company yet are hired to
you for a set period of time at a fixed monthly rate.
This product is available for cars only (Commercial Vehicles are NOT available)
What benefits does PCH offer to you the Customer?
Personal Contract Hire (PCH) will benefit anyone who is seeking to eliminate the
financial risk associated with disposing of the vehicle and also enjoy the convenience
of a full maintenance service (if requested), at a fixed monthly cost.
Can my company be named on PCH?
PCH is designed specifically for private individuals. It is important to understand
that in no way can an individual’s employer be involved in the arrangement. If your
employers are involved in any way then you may be at risk of Car Benefit Tax (under
section 157 of the Taxes Act 1988). This is often referred to as a P11D liability,
being linked to ‘Benefits in Kind’ arising directly from employment. Please seek
additional guidance from your local Tax Office if you have any questions regarding
your tax liability.
Is PCH subject to VAT?
Yes VAT at the current rate is charged but un-claimable by an individual.
As this is a personal contract there are no specific VAT or Corporation tax advantages
on the product.
What is the initial outlay to you?
Our Leasing Company will accept three rentals in advance. This ensures you have
a low cash outlay to enter into this type of contract.
What Payment Options do you have have with PCH?
There are 3 different Payment/Rental Profiles available for this product:
- Terminal Pause
If you take out a 36 month contract, you will pay 3 rentals in advance, followed
by 33 monthly rentals followed by 2 months where no rentals are due before the end
of the contract.
- Spread rentals
The normal payment profile in today's market providing a lower rental than 'terminal
pause' but with the same length of contract. If you take a 36 month contract, you
will pay 3 rentals in advance followed by 35 monthly rentals with the contract ending
in month 36.
- Enhanced deposit
This is used when you prefer to pay a higher payment in advance or have a part exchange
and wish to use this vehicle towards your initial payment – this will reduce your
regular monthly payment. If you enter into a 36 month contract, you will pay 1 rental
(should be no less than an equivalent 3 rentals) in advance followed by 35 monthly
rentals with the contract ending in month 36.
What services are available on a maintenance agreement for PCH contract?
Who do I call to arrange a service on my PCH vehicle?
How often should a service be carried out on a PCH vehicle?
Items included are servicing, routine maintenance, unlimited tyres, exhausts, batteries,
relief vehicle option (if specified) and breakdown assistance.
Items excluded are glass and damaged items.
Arranging this is easy; Call our DriverLine telephone service where you can arrange
- Service bookings with FREE collection and delivery including ‚'wash
- Breakdown and recovery services (Optional with a maintenance or non maintenance
- Tyre replacement service with mobile fitting available Free of Charge
- MOT booking facility
- Foreign travel documentation and advice
- Relief vehicle (maintenance contracts only)
Simply call DriveLine and all your maintenance requirements will be taken care of
leaving you a hassle free experience.
Services must be carried out as per the guidelines in the manufacturer's handbook,
failure to follow could invalidate the vehicle manufacturer’s warranty.
Does Our Leasing Company insure the Personal Contract Hire Vehicle?
No. It is your responsibility to insure the vehicle. Please see the Terms &
Conditions of the contract.
What happens if you exceed the contract mileage allowance?
How does excess mileage work in conjunction with Personal Contract Hire?
Should a vehicle be returned over mileage you will be liable for an excess mileage
charge. With any contract hire agreement, the predicted annual mileage of the vehicle
is crucial, as it will affect the resale price at the end of the contract and the
servicing costs. Should the contract mileage be exceeded, a charge will be made
for every mile over the agreed total contract mileage allowance at end of the contract
period. The pence per mile (ppm) figure is broken down to cover the two areas where
additional costs are incurred;
Depreciation - The additional mileage travelled means that when the vehicle is disposed
of at the end of the hire period the full amount anticipated at the outset of the
contract would not be achieved. The more miles the vehicle has driven the less it
would be worth when it is sold.
Maintenance (if taken out with the contract) - The maintenance budget initially
set would not meet the additional costs incurred if the mileage increased. For example,
an additional service or set of tyres may be required due to any extra mileage.
The excess charge is calculated after the vehicle is returned. The invoice is broken
into two areas, finance which covers the additional depreciation and services (if
taken) for additional maintenance costs.