Personal contract hire (PCH) is a form of vehicle finance for individual purchasers. It is a long-term rental agreement where you make fixed monthly payments for the agreed period, typically between 24 and 48 months. At the end of the agreement, you return the vehicle to the finance company without any further liability. Here are some key features of PCH:
- PCH is a form of hire purchase vehicle finance for individual purchasers.
- It is a long-term rental agreement where you make fixed monthly payments for the agreed period.
- At the end of the agreement, you return the vehicle to the finance company without any further liability.
- PCH is structured so that the customer pays a lower monthly amount over the contract period, leaving a final balloon payment to be made at the end of the agreement.
- Unlike a traditional hire purchase, where the customer repays the total debt in equal monthly instalments over the term of the agreement, the total borrowing is the same in both cases, and interest is payable on the entire amount (including the balloon payment on the PCH).
- PCH is a conditional sale agreement, and under UK law, the purchaser is protected under the Consumer Credit Act 1974 and the Financial Services Regulations 2004.
- PCH is a good option if you dont do too many miles and would like to have a new car every few years.
It is important to note that PCH is different from personal contract purchase (PCP), which is another form of hire purchase vehicle finance.
