Personal Car Leasing Options

Personal Contract Hire & Personal Contract Purchase

Personal Car Leasing is basically a long term rental agreement to lease a car (usually for a period of 2 – 5 years), with a set mileage allowance and a fixed monthly payment. All makes and models of cars can be leased, and it is available to private individuals.

These are the main types of Personal Car Leasing Contracts:-

• Personal Contract Hire – PCH
• Personal Contract Purchase – PCP

To help you choose which of the Private Car Leasing options is right for you, here are the main features and benefits of each.

Personal Contract Hire

Personal Contract Hire, also known as PCH, is the most popular type of private car leasing available in the UK.

• A simple way to budget and fix your monthly motoring costs
• The costs of Servicing & Maintenance and Roadside Rescue can be included
• Road Fund Licence is usually included for the duration of the agreement
• All you need to do is obtain comprehensive Insurance and put fuel in your lease car
• Low initial outlay compared to other forms of car finance
• Flexible terms, initial payments and mileage allowances to suit your needs
• Ability to amend the mileage allowance if your circumstances change
• No financial risk associated with depreciation of the vehicle over time
• No hassle of vehicle disposal and part-exchange with Personal Contract Hire
• Your car is usually delivered and collected free of charge (UK mainland)
• Hand the car back at the end with no further commitment or final payment
• Remember that excess mileage and Fair Wear & Tear charges may apply

Personal Contract Purchase

Personal Contract Purchase, also known as PCP, is very similar to Personal Contract Hire and, in fact, most of the above points apply. The main difference is that there is an option to own the vehicle at the end of the contract period. PCP is a much more cost-effective way of eventually owning a vehicle than choosing the traditional hire purchase route, but could have higher monthly payments than Personal Contract Hire.

The main features and benefits of Personal Contract Purchase are:-

• The option to retain your lease car at the end, without any depreciation risks
• The costs of Servicing & Maintenance and Roadside Rescue can be included
• No financial risk associated with depreciation of the car over time
• There is a Guaranteed Future Value (GFV) at which the car can be purchased
• If your car is worth more than the GFV, you could sell it & pocket the difference
• You may be able to afford a better car than you previously thought possible
• The car is owned by the finance company until the final payment is made
• End of Contract options include paying the final payment and keeping the car, selling the car and using any available equity towards your next vehicle, or simply handing back the vehicle with no further commitment or final payment
• Remember that excess mileage and Fair Wear & Tear charges may apply

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