Personal Contract Hire (PCH) or Business Contract Hire (BCH) allows you (the lessee) to choose the vehicle you want, use it for a set period of time and then give it back to the leasing company (the lessor) at the end of the period of hire. You will pay a fixed monthly rental payment for a fixed period of time, this is based on a fixed annual agreed mileage.
Some PCH and BCH agreements include Annual Vehicle Excise Duty (road tax). Service and maintenance plans are optional but can also be added to the contract.
You are not responsible for the disposal or sale price of the vehicle at the end of the contract. The car is owned by the finance company, you have no option to buy it, and you can not sell it. All rentals will attract VAT at the current rate.
|Initial Rental||Advance Rentals are usually paid at the start of the agreement, these are normally agreed by the lessor and lessee, but 3/6 advance rentals are most common.|
|Fees||The Lessor may charge additional fees, such as arrangement fees. If you are VAT registered, the VAT on the rentals can be wholly or partially reclaimed by the lessee.|
|Restrictions||You will pay for any excess mileage charge if you have exceed your agreed mileage and/or if the vehicle is not maintained and kept in good condition. The vehicle must be fully insured as well as in a good roadworthy condition.|
|Ending the Agreement||Once your agreed contract term has run out you can extend the lease on the car or you can choose to hand the car back, subject to restrictions. If you settle early there maybe penalties for doing so.|