Personal contract hire

Personal Contract Hire (PCH): How It Works

If you want to drive a new car without buying it outright, Personal Contract Hire (PCH) is one of the simplest and most widespread options available.

At LeaseCar, we help drivers use PCH to get a brand-new car with fixed monthly payments and none of the hassle of ownership. This guide explains how PCH works, what it costs, and whether it’s the right choice for you.

Key takeaways

• PCH is a long-term car rental with fixed monthly payments

• You don’t own the car and return it at the end of the contract

• Payments cover depreciation, road tax and VAT

• You choose your contract length, mileage and upfront cost

• There’s no option to buy, unlike PCP

• It’s ideal if you want a new car every few years with no resale worries

What is Personal Contract Hire (PCH)?

Personal Contract Hire (PCH) is the most common form of car leasing in the UK. In simple terms, you:

• Choose a car

• Pay a fixed monthly amount

• Drive it for an agreed period

• Hand it back at the end

There’s no ownership involved. You’re paying to use the car, not to buy it. Most people who talk about “car leasing” are referring to PCH.

How does Personal Contract Hire work?

A PCH agreement is flexible, but it always follows the same basic structure.

Choose your contract length

Most agreements run for:

• 24 months

• 36 months

• 48 months

Shorter contracts mean more frequent upgrades. Longer ones usually reduce monthly costs.

Set your monthly payments

Your monthly payment is fixed for the full contract. It typically includes:

• Vehicle depreciation

• Road tax

• VAT

You can also add a maintenance package to cover servicing and routine repairs.

Decide on your upfront payment

You’ll usually pay an initial rental upfront.

• Often equivalent to 3–12 months’ payments

• The higher it is, the lower your regular monthly payments will be

At LeaseCar, we appreciate that sometimes, a high up-front initial payment is sometimes a barrier to motorists. We provide a number of low initial cost lease deals which might be more suitable for certain budgets.

Choose your annual mileage

You’ll agree a mileage limit based on your driving habits. The lower your expected mileage, the lower the monthly cost. However, if you exceed this there are often additional charges at the end of the lease.

At LeaseCar, we’ll help you set this realistically so you don’t overpay or get a nasty surprise at the end of the contract.

What happens at the end of the contract?

When your contract ends:

• Return the car

• Pick a new vehicle to lease, or simply walk away with no obligation

The vehicle needs to be in a good condition, see our guidelines on acceptable wear and tear for lease vehicles and what falls within your agreement.

There's no resale, no large final payment and depreciation is factored into the monthly costs you pay for the agreed lease period: so if the model is replaced by a newer one, or is suddenly unpopular, or the market is flooded with stock - you won't face any additional depreciation costs.

Is PCH right for you?

PCH works best if you:

• Like driving a new car every few years

• Want predictable monthly costs

• Don’t want the hassle of selling a used car

• Aren’t concerned about owning the vehicle

It may not be right if you:

• Want to own the car long-term

• Drive significantly more than average mileage

• Prefer to build equity in a vehicle

If you are a commercial customer, get in touch with us to discuss other options that might be more suitable, such as finance leasing or lease purchase.

What to consider before leasing a car

Before taking out a PCH agreement, it’s worth thinking about:

Budget – what monthly payment feels comfortable?

Upfront cost – how much do you want to pay initially?

Mileage – how much do you realistically drive each year?

Future plans – are your circumstances likely to change?

Ownership – do you want the option to buy later?

LeaseCar helps you match these factors to the right deal—so you don’t end up in a contract that doesn’t suit your lifestyle

The main benefits of Personal Contract Hire

PCH has become popular for a reason. It’s a straightforward way to drive a new car without the usual complications.

Fixed monthly payments - No surprises: your costs stay the same throughout the contract.

Lower upfront cost than buying - You don’t need a large lump sum to get started.

Drive a better car for your budget - Leasing can make higher-spec models more accessible.

No depreciation worries - You’re not affected by the car losing value over time.

Easy upgrade cycle - Switch to a new car every few years without selling.

Optional maintenance packages - Avoid unexpected servicing costs.

PCH vs buying a car

Buying a car outright comes with more responsibility. You’ll need to:

• Pay a large upfront cost or finance it

• Deal with depreciation

• Cover increasing maintenance costs and MOTs as the vehicle ages

• Handle selling or part exchange later

With PCH:

• Depreciation is built into your monthly payments

• You don’t need to sell the car

• You avoid the risk of unexpected drops in value

For many drivers, that simplicity is the main appeal.

PCH vs PCP: what’s the difference?

PCH and PCP are often confused, but they serve different purposes.

Personal Contract Hire (PCH)

• You never own the car

• Lower monthly payments (typically)

• No final balloon payment

• Simply return the car at the end

Personal Contract Purchase (PCP)

• Option to buy the car at the end

• Includes a balloon payment if you keep it

• Monthly payments may be higher

• More flexibility if ownership matters to you

Which is better?

Choose PCH if you want simplicity and lower monthly costs.

Choose PCP if you might want to keep the car.

Ready to lease your next car?

If you’re considering Personal Contract Hire, the next step is finding a deal that fits your budget and lifestyle.

LeaseCar keeps things simple. We’ll help you:

• Choose the right car

• Set realistic mileage and costs

• Find a deal that works long-term

Browse our latest lease deals or get in touch with our team on 0344 745 1818 to talk through your options.