What is a Personal Lease?
By Paul Bulloch, Managing Director of Concept Vehicle Leasing
Until a few years ago, vehicle leasing and contract hire were very much restricted to the Corporate and Business world. For the consumer, unless they had money available in the bank, the only real options were to take on a bank loan, or visit a franchised dealership who would traditionally offer a Hire Purchase agreement requiring a large deposit. 
Thankfully, those days are well and truly behind us. With benefit in kind taxation being a heavy weight for employees driving a company car, employers sought ways by which they could ease the burden by paying the employee a ‘car allowance’ with their salary. Although income tax is payable on this amount, in many cases the employee is able to save money by not having to pay ‘benefit in kind tax’.
Leasing Companies have adapted their offering to include agreements such as ‘Personal Contract Purchase’, and more recently ‘Personal Contract Hire’ - which now caters for the majority of personal leasing agreements. Now the consumer has choice - and available from a wide range of different sources, including banks, dealerships, leasing companies and leasing brokers such as Concept Vehicle Leasing..
So what’s the difference?
Personal Contract Hire (PCH)
A Personal Contract Hire (PCH) is in many cases exactly the same agreement as a Business Contract Hire, but the agreement is in the name of the individual. The vehicle is taken on for a fixed period of time (usually 2-5 years), and at the end of the primary term, the vehicle is returned to the leasing company just as you would with a Company Car.
Personal Contract Purchase (PCP)
A Personal Contract Purchase is essentially an adaption of a traditional ‘Hire Purchase with Balloon’ agreement, so is more geared towards those individuals who may wish to buy the car at the end of the term for an amount which is guaranteed at the start of the contract. However, a PCP gives the best of both worlds with the added flexibility of being able to hand the vehicle back to the leasing company with no further payments being made.
Key Points of Interest
- Road Tax is usually included for the full duration of contract with a PCH, and for at least 12 months with a PCP (although check the terms with your provider)
- Fixed Cost Servicing and Tyres plus a wide range of additional products and services are available, giving you complete peace of mind. In fact – there are now providers who offer these products on a ‘standalone’ basis, including Concept Serviceplan.
- Individuals are able to access deals only available to leasing companies with exceptional discounts – although some deals are not available on a PCP type agreement.
- Low Initial Payments required (typically 3 months), and monthly payments are fixed for the duration of agreement (regardless of interest rate changes) allowing accurate budgeting
- Both agreements are ideal for those wishing to ‘Opt Out’ off a company car scheme, and are in receipt of a cash allowance.