Knowledge Bank

Personal Contract Hire (Personal Leasing)

What is Personal Leasing?

Personal contract hire (often referred to as ‘personal leasing’) is a way of leasing a vehicle over a longer period of time (typically 2-4 years). Personal contract hire is an increasingly popular way of driving a new vehicle as the upfront outlay is considerably less than buying a new vehicle outright.

How does Personal Contract Hire work?

Once you’ve selected a car you’d like to lease, you’ll pay an initial fee (the initial rental) followed by regular monthly rentals over the course of your lease agreement. The fee you pay per month is usually determined by the car spec, plus your annual mileage (i.e. a top spec model with higher annual mileage will likely result in larger monthly payments).

At the end of your contract you’ll return the vehicle to the finance company. Because you never own the vehicle (the finance company does), you don’t need to worry about the depreciating value of the vehicle.

You’re then free to take out another vehicle lease. In some instances, depending on approval from your provider, you may also be able to extend your existing vehicle contract.

Benefits of Personal Contract Hire

  • Low initial rental payment
  • Fixed monthly payments for the term of your lease agreement
  • Easier budget planning as a result
  • Variable contract length and mileage terms - adding flexibility depending on your finance circumstances and driving style
  • Vehicle maintenance can usually be included in your monthly fees, helping to spread the cost
  • Potentially allows you to drive a vehicle that may otherwise be unattainable in terms of an on-the-road (OTR) cost
  • After your lease agreement has ended, you don’t need to worry about the depreciation value or disposal

Other things to consider

  • Terminating your personal contract hire early can be expensive
  • To acquire finance you’ll need to be 18 years old, although some funders require you to be 21
  • Exceeding your agreed annual mileage will incur excess mileage charges at the end of your contract
  • Variable contract length and mileage terms - adding flexibility depending on your finance circumstances and driving style
  • If your vehicle is damaged (over and above ‘fair wear and tear’ as set out in your agreement) you will likely have to pay an additional charge
  • The onus is still on you to insure your vehicle (fully comprehensive) for the duration of the agreement
  • You will not own the vehicle
Lex Autolease
Leasing Broker Federation

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