PCH or BCH

What is Personal Contract Hire (PCH)?

Personal Contact Hire (PCH) is a long-term vehicle rental agreement. It is a solution for private individuals who wish to return the vehicle at the end of the agreement, leaving the finance company to worry about depreciation values and disposal of the car.

When your agreement is coming to an end, you simply return the vehicle to the finance company. Providing the vehicle is in good condition, you have followed manufacturer guidelines for servicing, and maintenance, and the agreed mileage allowances have not been exceeded, there will be no outstanding financial obligations. 

Vehicles that are part of a PCH deal cannot be used for business purposes (you may incur penalty charges for business use) and must be insured with full comprehensive cover.

The key benefits and features of personal contract hire

  • Optional low initial rental
  • Fixed monthly rentals cover the rental of the vehicle, making budget planning easier.
  • Road tax (VED) and breakdown cover (dependant on manufacturer) is included in the monthly rental.
  • Maintenance of vehicles can be included in the monthly rentals spreading the cost to prevent huge, unexpected bills.
  • The monthly rentals are calculated by taking the following into consideration:
    • The cost of the vehicle
    • The contract period (usually between 24 and 60 months)
    • Anticipated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the contract)
    • Mileage allowance (as chosen by you before the start of your contract)
    • Any additional options or a maintenance contract.
  • You never own the vehicle – it remains the property of the finance company, which means you do not need to worry about its depreciation or disposal.
     

What is Business Contract Hire (BCH)?

Business Contract Hire (BCH) is a long-term vehicle rental agreement for all types of businesses, including sole traders, partnerships, and limited companies. It's an excellent option for VAT registered companies, as you can claim back up to 100% of the payments if the vehicle is solely for business use or up to 50% if the car has some private usage. 

When your agreement is coming to an end, you simply return the vehicle to the finance company. Providing the vehicle is in good condition, you have followed manufacturer guidelines for servicing, and maintenance, and the agreed mileage allowances have not been exceeded, there will be no outstanding financial obligations. 

Vehicles that are part of a BCH deal can be used for business and personal purposes and must be insured with full comprehensive cover.

The key benefits and features of business contract hire

  • Optional low initial rental
  • Fixed monthly rentals cover the rental of the vehicle, making budget planning easier.
  • Road tax (VED) and breakdown cover (dependant on manufacturer) is included in the monthly rental.
  • Maintenance of vehicles can be included in the monthly rentals spreading the cost to prevent huge, unexpected bills.
  • The monthly rentals are calculated by taking the following into consideration:
    • The cost of the vehicle
    • The contract period (usually between 24 and 60 months)
    • Anticipated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the contract)
    • Mileage allowance (as chosen by you before the start of your contract)
    • Any additional options, such as a maintenance contract
  • The company never owns the vehicle – it remains the property of the finance company, which means you do not need to worry about its disposal or having a depreciating asset on your company's balance sheet.