Personal Contract Hire Explained

In this article, we explain what Personal Contract Hire (PCH) is and provide you with all the information you need to decide whether it’s the right option for you.

Personal Contract Hire (PCH) is perfect for:

– If you want to change your car every 3-4 years

What is Personal Contract Hire (PCH)?

A Personal Contract Hire (PCH) is a lease contract that is typically seen as the most ‘hassle-free’ type of car finance available. The deal normally lasts 3-4 years, needs an initial rental, and tends to have lower monthly payments. At the end of the contract, you will hand the car back to the dealer.

PCH Terms Explained

Term What you need to know
Lease An agreement between the customer and dealer where the car is being leased to you for a set period of time. You cannot own the car on a Lease contract.
Duration of Agreement The total duration of your agreement in months.
On the Road Price/
Cash Price
The total amount your vehicle is worth if you were to purchase your vehicle outright.
Initial Rental The initial rental is an upfront cost and is typically 6x the amount of your monthly payment. For example, if your monthly payment is £99 per month, the initial rental will be £594.
XX Monthly Payments The amount you pay per month of your finance agreement. Throughout the contract your monthly payments will be on lease contract basis, and therefore tend to be lower than other finance contracts such as a HP.
Miles per Annum Your contract will have an estimated mileage per year, e.g. 6,000 miles per year (24,000 miles over a 4 year contract). The estimate is used to work out the likely future value of your vehicle at the end of your agreement. As long as you do not drive more than 24,000 miles, there will be no mileage charges at the end of your contract.
Excess Mileage Charge The amount in pence per mile that you will pay for any exceeded mileage.

Personal Contract Hire Advantages of PCH:

  • PCH is hassle-free – you just hand the car back at the end
  • The monthly payments tend to be lower than other types of finance
  • There’s no risk of depreciation
  • You can include service and maintenance costs within your monthly payments if you want to

Things to consider

  • There is no option to purchase the car at the end
  • If you have exceeded your contracted mileage when handing the car back, excess mileage charges will apply

You can view our latest finance offers here, or if you want to find out about other car finance options, check out our car finance guide.

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2 thoughts on “Personal Contract Hire Explained”

  1. I have a car on pcp. At the end of the term does the car come back to you or does it belong to finance company

    1. Hi Joanne,

      Thank you for your comment. However, this blog piece is for a Personal Contract Hire agreement and not a Personal Contract Purchase. We do have a blog post on this also, here:

      Basically, at the end of your PCP agreement you have three options to consider:

      1. You can buy the car by paying the Guarenteed Future Value (GFV),

      2. Hand the car back to the dealer (this will be subject to the expected mileage and condition of the car) or

      3. You can Part Exchange for a new car (using any of the car’s equity towards your next deposit).

      If you require any further help with this, please let us know.

      Many thanks,

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