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What is Personal Contract Hire? – Suitability Explanation

Personal Contract Hire is a straight-forward fixed term lease agreement, whereby you commit to leasing a new car for a fixed amount of time, and at the end of the agreement you simply return the vehicle to the leasing company.  It’s effectively like a “Long Term Rental”. 

The rentals are calculated based on what the leasing company buys the vehicle for at the start of the agreement, and what they expect the vehicle to be worth when you return it at the end of the contract (the “residual value”).  The different between the original purchase price and the residual value is the depreciation.

Personal Contract Hire – Key Benefits

Personal Leasing

Depreciation and Disposal – Simply return the vehicle at the end of the agreement – the leasing company assumes the risk on its future value, and assume responsibility for its disposal
Fixed Monthly Rentals – you know exactly how much you’ll be paying for the vehicle each month, enabling you to budget accurately.
Low Initial Outlay – Typically around 3 monthly rentals are required in advance, with the option to increase your initial outlay to lower the monthly rentals.
Choice of Term and Mileage – You decide how long you want to lease a vehicle for (between two and five years) and how many miles you’re likely to travel over the term of the agreement.
Peace of Mind – Road Tax is included for the duration of the agreement.  Service, Maintenance & Tyres may also be included for an additional amount, providing complete peace of mind.

Are there any disadvantages to Personal Contract Hire?

The leasing company will retain ownership of the vehicle, so Personal Contract Hire may not be suitable for you if you are looking to own or buy a vehicle.
Personal Contract Hire is a fixed-term lease agreement, and therefore if you might need to end the agreement early, you are likely to incur costs for Early Termination.
As vehicles are normally returned at the end of the agreement, you’ll need to consider how the vehicle is to be used, and whether it’s likely to suffer damage which is outside of normal fair wear & tear.  Leasing companies may charge for damage which falls outside of BVRLA Fair Wear & Tear standards.
Lease rentals are based on pre-determined mileage, which if exceeded will result in an excess mileage charge.  It’s sometimes possible to re-schedule an agreement part way through to take into account mileage variances.

What else do I need to know about Personal Contract Hire?

Financial Obligations – Personal Contract Hire is a fixed term agreement, so ensure you will be able to afford the rentals for the duration of the lease before you agree to go ahead.
Credit Approval – You will need to be approved for credit with one of our lenders before a lease can go ahead.  Speak with your Account Manager if you are unsure of the requirements for securing credit on a lease vehicle.
Taking a Lease Vehicle Abroad – It’s possible to take a lease vehicle abroad, but you will need permission from the leasing company before you go, so contact us in advance for further advice.
Private Number Plates – It’s possible to fit a private number plate to a lease vehicle, but you must ensure it’s removed in plenty of time of return of the vehicle to avoid losing the plate at the end of the contract.

For further information or advice on Personal Contract Hire, contact Concept Vehicle Leasing on 0800 043 2050 and the team will be happy to help.


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Our Awards & Accreditations

  • HSBC South London Business Award 2012 – Winner
  • London Business Awards 2014 – Highly Commended
  • Small Fleet Leasing Awards 2013 – Winner
  • BVRLA Leasing Broker Member Award
  • Small Fleet Leasing Federation