Glossary · UK
What is Personal Contract Hire (PCH)?
A long-term vehicle lease where you pay fixed monthly rentals to use a car for an agreed term and mileage, then hand it back -- you never own the car.
Full Definition
Personal Contract Hire (PCH), commonly called car leasing, is a way of using a vehicle for a fixed term (typically 2-4 years) and an agreed annual mileage allowance in exchange for fixed monthly rental payments, with no option to buy the car at the end -- it is simply handed back to the leasing company. Because there is no ownership option, PCH usually requires a smaller initial payment than a PCP (Personal Contract Purchase) and is not secured against any resale or 'balloon' value, so monthly payments purely reflect the vehicle's expected depreciation and finance charges over the term plus VAT. Exceeding the agreed mileage triggers an excess mileage charge per mile over, and the vehicle must be returned in line with the industry's fair wear and tear guidelines, with additional charges for damage beyond that standard. Because you never own the asset, PCH cannot be voluntarily terminated under the same Consumer Credit Act rights that apply to hire purchase and PCP agreements.