PCH is a vehicle rental solution for private individuals. You pay a fixed monthly sum for the duration of the agreement, which is calculated on the vehicle type, duration and anticipated annual mileage.

At the end of the agreement, the vehicle is returned to the finance company (deprecation and disposal is taken care of by the finance company).

The minimum initial payment is normally three payments in advance, although this can be as low as one payment (subject to status), or as high as twelve payments (or even a lump sum) upfront, depending on the deal taken. The vehicle is normally registered to the finance company, or “your name” care of the finance company at their office address.

Deals are normally calculated over a two or three year period, these deals are often advertised as “3+23” or “3+35” contracts. This works with three payments in advance then 23 or 35 payments (taken by Direct Debit) over the rest of the term. There is also an option to take a maintenance package, which would provide services such as breakdown cover for the duration of contract, as well as cover all servicing costs, tyres and even puncture in some instances. Road Fund Licence costs are included for the whole duration of the contract.

Mileage allowance is agreed in advance and the minimum is normally 6,000 miles per annum. The maximum is normally 50,000 miles per annum. Mileage over and above the agreed amount is charged at an excess mileage rate. This rate will be billed at the end of the contract.

At the end of your contract, if you have exceeded your agreed mileage an excess mileage charge would be payable. This is worked out on a “Pence per mile” basis and the value is known at the contract inception. Upon returning your vehicle, it will be assessed according to the BVRLA “Fair Wear & Tear” guidelines. Any damage which falls outside this criteria may be subject to additional charges.

You may have the option to purchase the vehicle at the end of the contract, but this varies and is at the sole discretion of the finance provider. Other options include;

Informal extension: If you are happy or not ready to return the vehicle at the planned contract conclusion date, you may continue to run the vehicle on for a limited period.

Formal extension: You may request an extension from the finance company to continue for a further six or twelve months.

Both extension “types” are at the discretion of the finance company.

This article provides general information to be used for your reference only and is not intended as a substitute for financial advice specifically directed at your business and taking account of the particularities of your situation.