What is Personal Contract Hire?
Personal Contract Hire is one of the most common ways of leasing a car. It allows you to privately lease your car for a monthly fixed-rate term. There are many benefits to leasing a car that you might not be aware of.
Leasing a car through Personal Contract Hire actually works out cheaper than buying a car. You get to choose which car you hire and the terms of your lease agreement, even how long you lease the car for.
It’s a cost effective way of motoring and is becoming more popular amongst drivers.
How does Personal Contract Hire Work?
Essentially, if you decided to lease a car, you’re renting it from the leasing company. You never actually own the car. After your lease is up, you can either return the car and walk away or start a new personal lease agreement. This is different to Personal Contract Purchase, where you get to keep the car after the leasing agreement.
During the agreed leasing period, you have to make sure you look after the car. You will have a certain amount of mileage. If you go over this mileage, you might have to pay a penalty.
The car must only have an acceptable amount of wear and tear for the amount of time it has been leased. This is because you don’t have to worry about the depreciation or resale value of the car, the leasing company does.
You can include maintenance in your agreement, which will take care of all your vehicle maintenance and servicing during the period you’re leasing the car.
Would I Qualify for Personal Contract Hire?
Interested in leasing a car? Well make sure you qualify for Personal Contract Hire first. There are a requirements to leasing a car, similar to the requirements of taking out a loan.
In order to qualify for Personal Contract Hire you must:
- Be 18+ years of age
- Have a full UK driving license
- Have three years of employment history
- Have a decent credit score
Remember, you need to be able to afford your contract. Make sure you work out your budget because ending your contract early can be expensive.
What are the Benefits of Personal Contract Hire?
There are many benefits of Personal Contract Hire. As you don’t own the car, you don’t have to worry about the resale value.
The fixed monthly payments make budgeting is easy, especially if you get a maintenance and servicing plan. The initial rental payment is also low considering how much you would pay for a car if you were buying it. On top of that, you don’t pay any tax on your car.
One of the most exciting benefits of Personal Contract Hire is you get to own a car you might not be able to afford otherwise. Cutting the price up into affordable monthly payments means that you can drive the car of your dreams, without having to break the bank.