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Personal Contract Hire / Leasing

Personal Contract Hire / Leasing

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 the following:

  • Service bookings with FREE collection and delivery including ‚'wash and vac'
  • Breakdown and recovery services (Optional with a maintenance or non maintenance contract)
  • 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.