How Does Personal Contract Hire Work?
Personal Contract Hire (PCH) agreements are becoming increasingly popular in the UK, yet many drivers who could benefit from this funding method are still opting for car loans, hire purchase agreements or personal contract purchase (PCP) agreements to acquire their vehicle. Choosing the right model, specification and colour of your new BMW is important, but knowing which form of finance will offer the best value for money for you, given your personal circumstances, is equally important and can have a significant impact on the overall costs of driving your new car.
Customers who choose personal contract hire are essentially renting a car for a set period of time and mileage, (usually between 24 and 60 months and any annual mileage between 5,000 and 40,000 miles per year). At the end of the agreement the car is handed back to the lease company and the customer starts a new agreement on their next choice of vehicle. Monthly rentals are dependent upon the model, the term and the annual mileage that the customer has chosen. Low deposits and low monthly payments are an attractive feature of personal contract hire agreements, often making new BMW cars affordable to customers who have traditionally purchased used examples. Deposits are usually the equivalent of three months rentals, but can be increased to the equivalent of six, nine or twelve month's rentals if you wish.
Road Fund Licence is always included in the rental as is BMW Roadside Assistance, both for the full term of the agreement and most customers also opt for the money saving 'maintenance package'. For an additional monthly rental all of the cars servicing and maintenance requirements can be catered for, this includes all servicing and consumable items such as tyres, brake pads, brake discs, batteries, exhausts and even wiper blades for the contract duration. Choosing the correct annual mileage at the start of the agreement is of course important, but with Vertu Motors you have the ability to alter your total contract mileage free of charge should your circumstances change. Contract mileages can be adjusted up or down at any time except within the last seven months of the agreement and your monthly rental will be increased or decreased accordingly.
It is fair to say that although personal contract hire may be perfect for some customers, it may not be for others. Here are the things which you need to know before committing to a personal contract hire agreement. If you exceed the anticipated mileage on the agreement, you will receive an excess mileage charge when handing the car back. This is why we offer you the facility to adjust the contract mileage mid-term.
Although a certain amount of fair wear and tear is expected when handing the car back, any other damage to the car may result in a charge. In effect, this is no different to when you trade-in a car that you own, when the cost of repairing any damage is taken into account with your part exchange valuation. A personal contract hire agreement is not a finance agreement but a fixed term contract. Therefore, handing the car back early, before the contract term has finished, will result in an early termination penalty.
We are a credit broker and not a lender. Finance is subject to status and finance company acceptance. We can introduce you to a limited number of lenders and their finance products. We will typically receive a commission from the lender, as either a fixed fee or a fixed percentage on the amount you borrow. The commission we earn does not change by the type of finance. A guarantee may be required. The finance rate will vary dependent of customer personal circumstances for in dealership purchases. Library image shown for illustration purposes only