Typically, Personal Contract Hire (PCH) is tailored to the needs of business customers – van drivers, fleet managers and company car owners. This is because the vehicle is not classed as a company asset during the finance agreement, freeing enterprises from many of the obligations of ownership.
Most PCH terms last from two years to up to five years. Monthly payments and the interest rate are set at the beginning of the agreement, locked in against inflation. For the first year, the car's road fund licence is also included. It is usually possible to add servicing and maintenance to the monthly amount at an additional charge.
Payments are calculated using the expected difference between the vehicle's current value and what it will be worth at the end of the term. This makes PCH finance more competitive and affordable. Monthly payments often work out cheaper than the equivalent repayments on a standard bank loan.
Note that PCH does not give you the option to own the car – it must be returned when the agreement finishes. This means you have the flexibility and freedom to lease new vehicles on a regular basis. Any depreciation in the value of your chosen model has no effect on your business.