Personal contract hire (PCH) is the most recognised form of personal car leasing, which is provided to individual customers (not businesses) based on a fixed term and mileage agreement. Many customers use personal contract hire as an alternative to buying a car.
In essence, with a PCH you 'hire' (or lease) a car for an agreed period of time with the view of handing back the vehicle to the leasing company at the end of the agreement. An initial payment is required at the beginning of the contract followed by monthly fixed payments for the remaining term of the contract (usually between 2-5 years). If you were to exceed the mileage agreed, however, you would incur extra charges in the form of an excess mileage rate, which is calculated in pence per mile. At the end of a personal contract hire agreement, you can either extend your current agreement, or hand back the vehicle and start a new PCH contract.
Personal contract purchase (PCP) is similar to personal contract hire (PCH), in the sense that it is a fixed term and mileage agreement. However, the difference with a personal contract purchase leasing deal is that you have the option to buy the car after the lease is over.
At the end of a PCP agreement, you have the option of handing the vehicle back, or purchasing the car with a final payment. Please note personal contract purchase only allows 12 months road fund licence.
Business contract hire (BCH) is a type of fixed term car lease agreement for businesses. It is the most popular form of business vehicle hire, with the majority of company cars in the UK funded in this way.
Similar to personal contract hire, a BCH lease allows customers to 'hire' a new car through their business, for an agreed period of time (typically between 12-60 months). Once the agreement is over, the car is handed back to the leasing company. Contract hire is a popular choice for VAT-registered businesses, who can recover 50% of the VAT on the finance element (depending on your business circumstances). Business lease deals are calculated on a fixed term and mileage agreement, and typically range from 12-59 months. Contracts can be tailored to your business requirements.