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What is Personal Contract Hire?

Cars are one of the most popular forms of transport on the planet and Personal Contract Hire is a fantastic way to get on the roads.

Having the freedom to drive where you want and when you want is something that never gets old. Personal Contract Hire makes using your vehicle much more straightforward and affordable, especially when compared to buying a car outright.

Personal Contract Hire has some similarities to other contract hire agreements, such as finance or PCP (Personal Contract Purchase).

However, it differs from Business Contract Hire as it only applies to a specific individual, instead of the business as a whole. Personal Contract Hire is one of the most popular ways of obtaining a car -it's usually what people are referring to when they talk about leasing a car.

When you have a Personal Contract Hire agreement, you're able to drive your car for an agreed period of time. This duration is known as the 'lease period'. Even though the car is actually in your possession, you do not own it.

With a Personal Contract Hire agreement, you make monthly fixed rental payments during the lease period. Once the contract is completed, you'll usually return the car. In some situations, you are able to keep the car and pay the balance off, although many people choose to return it and hire a new one instead.

Most people find this agreement appealing as it means that they don't have to worry about the eventual resale value of the actual car. As you don't actually own the vehicle, once your contract period has finished, you can walk away without any extra obligations.

In this guide, we'll run you through the process of Personal Contract Hire, so you can work out whether it's the best option for you. If you have any more questions, get in touch and our friendly team will be happy to help.

What is Personal Contract Hire?

Personal Contract Hire is a type of car finance that is often a good choice for individual drivers looking to lease a car. Whilst you can occasionally choose to buy the car at the end of the agreement, Personal Contract Hire is particularly suited for people who want to give the car back at the end of the rental period. You can then choose to lease another new car afterwards, if you wish.

If you need a car for both personal and business use,a Business Contract Hire agreement is probably a better option for you.

With Personal Contract Hire, you can choose the length of the contract to suit your future plans - most lease contracts tend to be for either two, three or four years. However, the length is something that we can negotiate if you decide you'd like a slightly longer lease. 

You may have to pay a deposit before leasing your car, but it's usually cheaper than other finance options or buying a new car - which is good news if you'd rather keep your money in your pocket. You'll also enjoy low monthly rental costs, meaning your budget will go much further, allowing you to drive a car you might not be able to afford in other circumstances.

When we tailor your lease options to suit your individual needs, you'll need to agree on an annual mileage allowance. There's no point in paying higher costs if you're not putting in a lot of miles, so this can be changed to suit your circumstances. There may be additional charges if you go over your mileage allowance, so it's important to try and stick to this during your lease.

The fixed monthly rental covers the depreciation on the car, as well as the cost of the lease. Your monthly cost also includes your road tax and, as you're leasing for personal use, the VAT is included. You can also add a maintenance package if you'd like the added peace of mind of knowing you'll have no surprise garage bills.

Unless you choose to add insurance as an extra, sorting out your insurance is still down to you, but if you're trying to keep your policy costs down, we're happy to help you select a car that's cheaper to insure than other models.

When your contract ends, you simply need to hand back the keys (and the car!) and either walk away or choose a brand-new car and lease deal. You don't have to buy the car at the end of your lease, so there is no hefty balloon payment to budget for or worry about.

Is a Personal Contract Hire agreement right for me?

Personal Contract Hire enables you to drive a car that puts a smile on your face while keeping costs low. You can drive a brand-new car knowing that your payments are fixed for the duration of your contract andyou're covered by a market-leading warranty

There's no deposit to pay either (although you may pay an initial rental charge), meaning there is less pressure on your finances. Other types of lease agreements, such as a Personal Contract Purchase, usually demand higher monthly payments. Borrowing money from a finance company is also typically more expensive, whereas outright purchase with your own cash means your bank account may take a big hit.

This all means that, with a Personal Contract Hire, you'll be able to drive a car that you might not be able to afford under other circumstances.

If you'd like to speak to someone to find out whether Personal Contract Hire is right for you, get in touch and a member of our team will be able to advise you accordingly.

How does Personal Contract Hire compare to buying a car outright?

Purchasing a car can also be a gamble (especially if you're buying second-hand), as you don't know the car's history. You could be taking on a whole host of costly mechanical problems. If that sounds like a nightmare you'd rather avoid, leasing could be right for you.

Choosing to purchase also means taking on the task of selling the car when you're ready for a new vehicle. This includes covering advertising costs, organising viewings if you're selling privately and, if you part exchange, accepting an offer that's often below your expectations.

All vehicles depreciate, but selling your cherished car can be heartbreaking when you realise just how much its market value has fallen. With a Personal Contract Hire agreement, the depreciation is worked out upfront and factored into your monthly rental.Depreciation rates can fluctuate over time, but you don't have to worry about that - you won't pay a penny more at the end of the agreed lease.

The car industry evolves and changes quickly. If you value improvements in performance, safety, efficiency and driver-comfort tech, leasing gives you the opportunity to enjoy all those developments as they happen, rather than waiting around for the right time to sell your own car.

If you need more information, you can find more answers to commonly asked questions here.

How does Personal Contract Hire differ from a Personal Contract Purchase?

If you're researching car leasing options to decide on the best one for your needs, you might have come across Personal Contract Purchase (PCP) deals. Personal Contract Hire and Personal Contract Purchase, sometimes called a Personal Contract Plan, are both popular ways of financing a car.

Before you make up your mind about the type of deal that's right for you, make sure you're clear on some vital details. You should ask yourself:

  • What monthly payments can I afford?
  • Do I have spare cash to put down as a deposit?
  • Am I looking to purchase the car at the end of the contract?
  • What is my anticipated annual mileage?
  • How likely is it that my circumstances will change during the contract?

At LeaseCar, we think that leasing is the better option, but naturally this will depend on your own personal circumstances.

Let's take a look at the key differences between the two types of agreements so that you can decide which one is right for you.

Purchasing your car

Personal Contract Hire essentially means that you rent a car for a set period of time. There is usually no option to buy the car at the end of the contract, although this may differ depending on the provider and the terms.

Personal Contract Purchase is a plan that gives you the option of buying the car at the end of the contract by paying a one-off balloon payment. Whilst this can be a good option if you want to keep the car, the balloon payment can be rather costly.

However, with Personal Contract Hire you can return the car and get driving another new car in no time!

Money matters

Personal Contract Hire offers lower monthly payments than agreements in which you pay to purchase the car at the end of the contract. Unlike Personal Contract Purchase, no deposit is required, although you might have to pay an initial rental upfront. 

This charge is usually cheaper than a deposit would be, although we also have a selection of cars available with a low initial rental cost if you're on a budget.

As previously stated, you also don't need to find extra funds to pay for the balloon payment at the end of your lease, as you'll usually just take another lease instead of buying the car.

Ending your agreement early

If you choose a Personal Contract Hire agreement, finishing your agreement early or changing the terms of your lease will result in additional charges.

Personal Contract Purchase deals often include the option to end the agreement early by paying off the difference between the amount you owe and the current market value of your car.

This is something you will need to consider before signing a contract, so it's important to ensure that the terms are suitable for yourself.

What are the benefits of Personal Contract Hire?

When choosing your next car, it can be difficult to know where to start - particularly as there are so many options available to you. It's important to draw up the pros and cons before making a decision, keeping yourself informed about all the possibilities.

Some of the most popular ways to obtain a new car at the moment are:

Personal Contract Hire agreements have many perks, which is why more and more drivers are turning to them as their preferred way to finance a new car. 

At LeaseCar, we believe that Personal Contract Hire is the best way to obtain a new car for your driving pleasure. There are many advantages to using Personal Contract Hire, which we'll run through in the next section of this guide.

And if you think you have any more questions in the meantime, get in touch with our helpful team!

Fixed rental costs for all

One of the main reasons you might choose to lease a car is the fixed costs involved.

As you understand how much the monthly rentals will be before the contract even begins, you'll be able to budget properly without any extra costs appearing out of nowhere.You may need to pay an initial rental fee upfront, but it's usually cheaper than paying a deposit for a new car. 

At LeaseCar, we work in a transparent and fair manner, so you'll never be surprised by additional costs when you lease a car through us.

Our Trustpilot score speaks for itself, showing you how beloved our services are by our customers.

Less obligation for the driver

One of the great things about Personal Contract Hire agreements is the fact that you have very few obligations to take care of.

As you don't own the car, you won't need to sell it at the end of the agreement. This completely rules out the job of selling your car, which can be quite lengthy depending on the market. All you have to do is return your car to us and the agreement is finished. You can then take out a new lease on another car if you prefer.

VED (Vehicle Excise Duty) will usually be included with your rental, and you'll also get a manufacturers warranty added on.

You also have the choice to add a maintenance package to your personal contract hire agreement. This means that you don't have to worry about any of these aspects of owning a vehicle, making life a lot easier during your lease.

Added convenience at no extra cost

One of the main reasons to take out a Personal Contract Hire agreement is that it's one of the most convenient ways to obtain a car. A lot of people get turned off from driving a new car because of how large the upfront cost can be, but there are also a raft of other fees you need to take into consideration.

The cost of motoring can be quite expensive, particularly if you factor in the following things:

The upfront costs for leasing a car are usually much lower than buying the car outright, and the monthly rentals are often much smaller than getting a loan. You'll also get your road tax and your warranty included within your monthly rentals, although you will still need to pay for vehicle insurance and breakdown cover.

Our Total Care package includes insurance, which you can include within your lease as an added extra. To find out more, get in touch today!

Take the stress out of financing a new car

Financing a car can be a real headache, not to mention time consuming. When you decide to use Personal Contract Hire to get behind the wheel of your new car, we'll do all the work for you to make sure you get the best possible deal. You won't have to worry about dealing with finance companies or applying for a bank loan.

At LeaseCar, we'll pre-select deals that are the perfect fit for your circumstances, saving you the complex task of sorting through everything that's available. Of course, you'll always make the final decision, but you'll get to choose from the deals offering you the most attractive terms.

Drive the car you really want, not just the car you can afford

There's no doubt that the car we choose to drive isn't always the car we dream of. Buying a new car outright can be pricey - particularly if you want a more luxurious model.

Personal Contract Hire opens the door to more choices and higher specs, as it offers low monthly costs that won't change for the duration of your lease. This also makes it easier to plan your budget over the course of the lease period.

You can drive a brand-new car every 2-4 years, depending on the length of contract you choose. That means no worrying about the car's previous history, and you'll also be keeping up with all the new tech!

If you're finding yourself pushed for funds, you can also check out our ‘Low Initial Rental Lease Deals' page.

No unexpected maintenance costs

When you decide to lease a car, you have the option ofadding a maintenance package to your contract

This means fewer disruptions caused by unforeseen trips to the garage workshop, less time spent on booking mechanical services and peace of mind that you and your family are travelling in a safe, regularly maintained vehicle. You'll still need to pay for your annual MOT, but you can rest assured that any mechanical faults found will be covered. 

You'll also get a warranty included with your lease, taking the pressure off during your lease contract.

Find out more about the options for maintaining your vehicle.

No resale worries or depreciation shocks

When you want to buy a new car, you'll usually have the problem of selling your old one, unless you're scrapping it (which can come with its own headaches).

When you lease a car, there's no need to worry about the hassle of reselling your car, and you'll never have to suffer a hard hit in the pocket caused by unexpected depreciation. Depreciation is calculated into your monthly rental costs before the contract is set up, so there's no need to worry, as we'll do all the work!

Just return the car to us and your agreement is complete. You can then choose to lease another new car if you wish.

Who is Personal Contract Hire designed for?

A Personal Contract Hire lease is calculated on the difference between the initial purchase price and the residual value of the vehicle, factoring depreciation into the mix.

At the end of your contract, you'll usually have to give the car back, before taking out a new lease on another car (if you wish). This means that you don't need to gamble on the used car market, which can be an issue if your car has depreciated greatly in value. Leasing a car makes driving a new car effortless, as you don't need to worry about selling your car later.

With Personal Contract Hire,you don't have to worry about depreciation costs or vehicle disposal at the end of the contract, as leasing is effectively a long term rental. You'll pay a fixed affordable rental cost to use the car for an agreed amount of time and mileage.

By leasing a car from LeaseCar, you can budget a monthly vehicle expense to drive a different new car every few years, ensuring an extremely cost effective process. Leasing a car makes driving a new car effortless, as you don't need to worry about selling your car later.

If you have to travel a lot,your mileage will increase. This means that the depreciation of your vehicle will naturally increase, leading to a higher monthly rental. However, this cost will be fixed, so you won't need to find extra funds to pay for your lease later on.

A lot of people prefer to drive new cars, but find them hard to afford. If this is the case for you, a Personal Contract Hire agreement may be the best option. After your contract has finished, you're able to start a brand new agreement on the same day. At LeaseCar,we have a wide range of cars to choose from, so you will never struggle for choice.

LeaseCar and you

One of our main goals at LeaseCar is to make sure that you end up with a contract that is best suited to your needs. We have a variety of cars that can be a great addition to any life, no matter what type of car you're looking for.

Whether you need a reliable car with room for all the family, or a luxurious sports car with powerful performance, we have it all!

If you've always wanted a car, or simply don't want to pay the fees that come with owning a vehicle, car leasing is the best option for you. If you have any questions at all, get in touch today and we can get you sorted with a car tailored for your driving pleasure.

Personal Contract Hire made easy

Trying to decide which long-term car rental agreement is right for you can feel daunting. There are various ways to lease a car, each with its own set of pros and cons, suited to different customer needs. Add to this the varying contract options offered by different leasing companies, and there's a lot of information to take in, with plenty of decisions to be made.

LeaseCar is the UK's leading car leasing site, and we have been providing Personal Contract Hire car finance for over 25 years. It's safe to say that we know the market inside out. 

The vehicle leasing industry changes quickly. Hundreds of new cars are launched every year, as well as new deals with different contract options. That's why we keep our knowledge up to date and ahead of the game. We're committed to providing you with the best advice to help you choose the right deal - with us, you'll get the car of your dreams at a monthly price you can afford.

If you'd like to chat with a member of our friendly LeaseCar team or have any questions, we're just a phone call away.

Competitive car leasing deals with LeaseCar

We're one of theUK's oldest and most trusted online car leasing companies. We make sure that every customer gets a deal that suits their circumstances and a car that's going to meet their needs.

At LeaseCar, we'll never offer a lease deal that we haven't researched beforehand, and we can give you unbeatable advice if you need help deciding on the right car. Our confidence in the quality services we offer means that we'll always try to beat a cheaper deal if you've been offered one elsewhere.

Once you've chosen your car and lease agreement, we'll sort out the necessary credit checks and finance package. When you're happy with everything, we'll get your car delivered to your doorstep fast and hassle-free. All you have to do is sit back and start planning your next road trip.

Take a look at our range of available cars and contact us to find out how you can get started on your Personal Contract Hire journey with LeaseCar.

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