Personal Contract Hire Car Finance for Used Cars
Personal contract hire (PCH) is a form of car finance that essentially involves leasing a car. Personal leasing could be a great option for you if you’re not interested in owning the car outright yourself. It gives great flexibility in the types of car you can drive.
It's not quite the same as hiring a car but works in a similar way; you agree to pay to use the
car for a set period, then return the car. End of story.
One significant advantage is monthly payments are lower than comparable HP and PCP
contracts. That's because you are only paying for the use of the car, not to own it.
Essentially, you pay for the cost of the depreciation of the car, so if you select a model that
won’t plummet in value you can get yourself a great deal with low monthly repayments.
Personal Contract Hire, like PCP, comes with a mileage limit which is usually 10,000 miles a
year. If you go over this you’ll be charged. Similarly, you need to make sure the car is
returned in good condition to avoid any additional fees.
Leasing is often used by businesses because of the tax benefits - although personal leasing
is becoming more popular. It's a great way of using a car for a year or more at a far lower
price than PCP or HP. The disadvantage is if you fall in love with the car, there is no option
to own it at the end.
If you want to find out the best personal contract hire deal for you, try our car finance calculator, but if you’re ready to take the plunge and apply for car finance today then visit our apply page. If you want to know more about Personal Contract Hire though, read our quick guide below.
Is Personal Contract Hire (PCH) right for me?
Personal Contract Hire: Things to Consider
- You will never own the car outright, so if you fall in love with it you’ll still have to give
- The monthly repayments depend on how the car is expected to depreciate so pick
your model wisely
- The car will be subject to a mileage allowance and must be returned in a good
condition or you will face charges
- While a bad credit score may affect your ability to apply for personal contract hire it often isn’t a huge issue. It is down to you to make sure you meet the monthly repayments, even if you pass the credit check. We have further information on car finance for people with bad credit scores.
Other guides related to car finance
Other Types of Car Finance
Frequently Asked Questions
This will vary depending on the type of car finance and your own credit score. Below are some representative examples of good APR rates for the different types of car finance:
Hire Purchase: 9.46%
Personal Contract Purchase: 5%
Personal Loan: 2.8%
The above are purely representative and are based on a good credit rating.
The amount you can afford to spend on a car will vary depending on your situation. The important thing is to make sure you can afford any repayments that your car finance agreement sets out. Missing repayments can cause issues between you and your lender and could end up in court or affecting your credit rating.
To work out what you can afford, try our car finance calculator.
The overall cost of car finance will vary depending on the type of car finance that you choose.
The cost of getting a car on finance will be the overall cost of the car, plus any interest owed over the term agreed.
For a personal contract hire agreement it’s worked out slightly differently; the amount you pay is calculated by the cost of the depreciation of the car over the term agreed.
Some types of car finance may also include fees for excessive mileage, any damage to the car or a maintenance cost, so keep an eye out for this.
If you want to find out what you can afford, check out our car finance calculator.
Selling your car with outstanding finance depends on the type of car finance you have.
On a hire purchase agreement you technically can't sell your car, but if you've repaid 50% you may be able to return it to your lender, or else pay the remaining fees before you sell it on.
On a PCP agreement it works in the same way as the hire purchase in terms of returning it. However, as you'd have to opt in to owning the car at the end with the additional cost of the balloon payment.
You can sell a car on a personal loan agreement, but it will still be on you to make the repayments from the original agreement.
You cannot sell your car on a personal contract hire agreement as it's never yours to sell.
A deposit for PCH will generally be equal to 3, 6, 9 or 12 months of the instalments you agree.
The more you can afford to pay at the beginning the lower your monthly repayments. While you don’t need to worry about saving money for a balloon payment, you do need to consider keeping savings for any excess mileage, maintenance or your next deposit.
Contracts for PCH generally last 12, 24, 36 or 48 months. There are other contract lengths however and it’s worth working out what the cost of the car will be at the end of the agreement, and whether a longer agreement is worthwhile.
As you are only renting the car, the costs can be relatively low. However it’s worth keeping an eye on any mileage allowance or maintenance costs as you may be charged for excessive mileage or anything deemed to be more than standard wear & tear.
The lender is always the legal owner of the car on PCH as you are essentially leasing it. There is no option at the end to buy the car outright.