How Personal Car Leasing Works

When it comes to personal car leasing, it can be very confusing with all of the jargon, facts and figures, so let’s clear it all up and lay it out for you in terms of how it all works!


Personal Contract Hire (PCH) is becoming one of the most popular ways of getting a brand-new car. A PCH is effectively where you rent the car for a number of months, normally between 24 and 48 months.

Just like when you rent a house or an apartment, you put down an initial payment, which again could range from 1 to 12 months of the monthly payment up front and then you make the 23/35/47 monthly payments thereafter. At the end of the lease, you can simply hand back the car and start a new PCH with a new vehicle. Simple!

Personal Contract Purchase (PCP), is similar in the way that you pay an upfront fee and then a monthly fee for the length of the contract but at the end of it, you have the option to make a balloon payment to buy the car outright – or you can opt out and hand it back. Generally, PCH is cheaper.

The Start of the Process...

The first thing you need to do is to check out the offers we have on our website or simply let us know which car you want, with a PCH it means that you can be in your dream car sooner rather than later! When you have picked your car, give us a call or get a quote online. Once you’ve decided which option to go with (PCH and PCP might not be available on all makes and models), you then have to check if you are eligible, this includes going through a full credit check to make sure you can afford the repayments. As with all credit agreements, any search can affect your credit score, so you need to be aware of that before proceeding with an agreement. When you pass the credit check, it’s only a matter of time until your car is delivered and you are behind the wheel!

Key Features of Personal Contract Hire

  1. Personal Contract Hire is fast becoming the most common form of private car leasing

  2. PCH gives you a fixed monthly rental that covers the rental of the vehicle, plus any maintenance options if chosen

  3. The monthly rentals are calculated by taking the following into consideration: 
    • The retail cost of the vehicle
    • The contract period – generally between 24 and 48 months
    • Anticipated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the contract)
    • Mileage allowance (as chosen by you before the start of your contract)
    • Any additional options, such as a maintenance contract

  4. You never technically own the vehicle – it remains the property of the finance company. However, this means you do not need to worry about the vehicle’s depreciating value & you also get your road tax covered for you for the whole duration of the term. How good is that?!

So What are the Benefits of Personal Contract Hire?

  1. The initial rental is generally low

  2. The fixed rentals for the whole contract, so it makes budgeting easier

  3. It gives you flexible terms to help meet your finance requirements and your driving habits

  4. There is the option to include the maintenance into the monthly rental, taking the headache away from finding those extra costs for maintenance

  5. Personal Contract Hire puts you behind the wheel of your dream car

  6. When you hand back the car, there is no worry about the depreciation in value of the car

[IMPORTANT] Things you Need to Consider when Taking out a Personal Contract Hire

  1. If you need to terminate the agreement early, this can be expensive

  2. If you exceed your agreed mileage, then that can be expenses and is charged on a per mile basis

  3. If the lease is for more than 3 years with no maintenance, you may have to get the car MOT’d

  4. When returning the car, the car must be in a well-maintained condition. Any damage over and above what is considered fair wear and tear will be charged

  5. A PCH vehicle must have Full Comprehensive Cover when it comes to insurance

  6. The vehicle is not yours, you may not have an option to buy it at the end of the contract

So What Happens at the End of the Contract?

All good things come to an end, whether you have taken out the lease for 24, 36 or 48 months, the time will come when you have to hand back the keys. So, what actually happens? The first thing will be the excess mileage has to be paid, if you have gone over your agreed mileage, then you will need to cover that cost. Likewise, for any potential damage that is deemed outside of normal wear and tear.

But if you haven’t gone over your mileage and there is no excessive damage, you hand back the keys and that is it! Well…Vehicle Lease Management will be in touch 3 months before so hopefully you will have your new car arranged at that point!

Start your new car journey today with Vehicle Lease Management, contact us here and let us get you on the road in your new, dream car!