PCH Car Finance Explained
Most of us aren’t in a position to put down the entire cost of a new car all at once. For this reason, car finance is a very popular option, and can keep you in a new car without breaking the bank. If you want to drive a new car every few years, Personal Contract Hire could be a great option for you.
With PCH, you never actually own the vehicle outright. Your service and maintenance costs are therefore kept to a minimum and when it’s time to change your car, you simply hand it back to the finance company - meaning there’s no hassle with respect to selling it. You also don’t need to worry about the drop in value, as your monthly payments are fixed and not subjected to fluctuations in the car industry.
It’s common to pay three months up front as an initial deposit, which means the initial outlay isn’t too big and deals normally range between 1 and 5 years. You can increase the initial deposit if you’d prefer to keep the monthly payments down. Why not watch our short video to find out more?
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What are the benefits of PCH?
You can benefit from the following PCH options below:
- It can be a cost-effective way to keep yourself in a new car
- You don’t need a big deposit or bank loan
- There’s no MOT to pay if your lease is for three years or less
- Road tax is covered for the duration of your contract
- Flexible contract lengths ranging from 24 to 60 months
- Mileage is also flexible to suit your personal needs
- You’ll have fixed monthly repayments, although they may be subject to rises in VAT.
- There’s no need to worry about losing money on the car’s value
- There’s no compulsory balloon payment at the end of the lease
- You’ll simply hand the car back at the end of your contract
The risks of taking out PCH include the following:
- Excess mileage fees could be substantial if you go far beyond your agreed limit
- The mileage can’t be changed at any point during the contract
- There can be high costs involved if you want to terminate the lease early
- You may be charged for any damage to the vehicle beyond what’s classed as fair wear and tear
Discover alternate finance options here.