Personal contract hire, or PCH, is one of the options you have when it comes to getting a new car and it shouldn’t be confused with a PCP or personal contract purchase, where you’ve the opportunity to buy the car at the end of the contract by making a balloon payment.
What is PCH?
PCH is an increasingly popular way for people to get a new car every few years. With PCH you lease a vehicle for a monthly fee, paid over a set period, but you give the car back at the end. You don’t have the option to buy the car. If you want another car at this point, you’ll need to sign up for a new agreement.
What are the benefits?
While PCH won’t be for everyone, it does have its benefits:
– the monthly payments are generally lower than those of a car loan or PCP finance deal
– it allows you to get a new car every few years
– you don’t have to worry about issues faced by car owners, depreciation for example, or selling your car on
– some PCH deals include the cost of maintenance, making it easier for you to manage your money
If this sounds like something for you, companies like Cheltenham car leasing business http://www.mphvehiclesolutions.co.uk/ can talk you through the options when it comes to leasing a car and the benefits as well as the downsides of getting one through PCH.
What are the downsides?
The main downside with PCH agreements is you never own the car, so if your financial situation changes over the life of the contract and you find you don’t have the deposit needed to sign a new contract when you give the car back, you are stuck. Other things you need to consider are:
– if your circumstances change or you don’t like the car, you can’t sell it on, and you can’t give it back without paying an exit fee, which could be hefty
– deposits can be quite large, often equivalent to several months’ worth of payments
– there are generally mileage limits (the lower the mileage, the lower your monthly payments) and if you go over these, you will have to pay for additional miles
– there is no balloon payment option to buy the car