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Contract Hire and Leasing Guide


Personal Contract Hire
All Vehicle Contracts Contract Hire and Leasing Guide - Personal Contract Hire
  • Personal Contract Hire

    Personal Contract Hire is a method for personal users to acquire their chosen vehicle on a VAT inclusive long term hire agreement, similar to that of Contract Hire but including the VAT. It is important to see if Personal Contract Hire is suitable for your requirements, and that you have a full understanding of the terms and conditions. Personal Contract Hire is popular with company car drivers wishing to opt out of their existing company car scheme, and take a cash allowance as an alternative to the company car. If you fall into this category, then choosing Personal Contract Hire could be just what you’re looking for.

    To make life as simple as possible, the All Vehicle Contracts website helps you choose and compare which vehicle and Personal Contract Hire deal is right for you. Interactive quotation options and full vehicle comparisons, including whole life costs on virtually any make, model or manufacturer, are available for you to explore and compare on line.

    So why choose Personal Contract Hire?
    • Affordable fixed cost motoring that can be tailored to suit your monthly budget and annual mileage, making budgeting easier and straightforward.
    • Fixed repayments over a period and on the exact vehicle that suits you.
    • Low initial outlay - Personal Contract Hire allows you to choose your own initial payment and contract term which is usually between 24-60 months.
    • VAT included within your monthly rental.
    • Servicing and maintenance packages can be included if required, combining a full service and maintenance option, that offers fixed monthly budgeting and takes care of all your motoring costs, with the exception of fuel and insurance.
    Personal Contract Hire - what does it mean?

    Personal Contract Hire is exactly what the name suggests. It is an agreement to hire a vehicle over a fixed term with an annual mileage limit and VAT included within the payments.

    Personal Contract Hire - what is the typical period?

    Personal Contract Hire is usually set for periods of between 24-60 months, and in some instances 12 and 18 month contract periods may be quoted.

    Personal Contract Hire - what is the typical initial payment?

    Personal Contract Hire initial payments normally calculated in months from 1-month in advance up to 6 or in some instances 9-months in advance. Of course the higher the initial payment the lower the monthly payment, therefore it is important to check advertised prices and compare like for like initial payments.

    Personal Contract Hire - what are the contract profiles?

    Contract Hire payment profiles consist of an initial payment, and fixed, spread monthly payments based on the initial payment amount for the duration of the contract, or a with a terminal pause.

    Jargon explained
    • Spread rental - Personal Contract Hire example, 3 years, 6 followed by 35, you will be paying a total of 41 payments. A spread rental agreement summarizes the first payment as 1 rental although it equates to six payments, hence the terminology spread rental.
    • Terminal pause - Personal Contract Hire example, 3 years, 3 followed by 33, you will be paying a total of 36 payments. A terminal pause rental agreement summarizes the first payment as 1 rental with a pause of 2 months at the close of the contract agreement; it equates to 36 payments with a 2 month holiday pause at the end of the agreement, hence the terminology Terminal pause.
    What happens if I go over the agreed contract mileage?

    Under the terms of a Contract Hire agreement, there will be an excess mileage clause, which documents excess mileage from the outset. This is charged at pence per mile. If you settle the agreement early, mileage is aggregated and calculated accordingly. If you go under the mileage, there is no refund.

    What happens at the end of Personal Contract Hire term?

    Under the terms of a Personal Contract Hire agreement, the vehicle is handed back at the end of the term. Under the terms of the contract agreement, there is an obligation to make the vehicle available at the end of the term for inspection.  Of course it is impossible to return a vehicle without acceptable fair wear and tear such as small stone chips, and light scratches. Please click the following links that refer to fair wear and tear guide, and vehicle hand-back procedures.

    What happens if I want to end the Personal Contract Hire agreement?

    Early settlement terms and conditions are detailed on the agreement, the norm is that no rebates are due if you wish to hand the vehicle back under 12 months into the agreement. After 12 months, settlement rebates may be available, they are often between 20 and 50% discount on outstanding rentals, plus outstanding excess mileage.  Please refer to your agreement prior to signing as early termination can prove costly.

    Personal Contract Hire or leasing - Which is the correct terminology?

    Personal Contract Hire may be referred to as Leasing, whilst this is a popular reference, a vehicle leasing agreement is not the same as Personal Contract Hire, there are key differences.

    Vehicle lease agreements are not available to personal users in the U.K.

    Personal users may enter into a Lease purchase or PCP agreement which is classed as a VAT inclusive finance agreement, and work on the similar principals as lease, but as a regulated, or unregulated finance agreement, regulated by the Consumer Credit Act 1974.

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    Your personal information is used to enable us to provide you with our services and update our records about you.

    You are entitled to request a copy of the personal information we hold about you and we will not disclose your personal information outside of All Vehicle Contracts without your permission to do so; however, we may supply information to Police forces and central government if required to do so, in full compliance of the Data Protection Act.

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