6 Things You Should Know About Personal Contract Hire
If you’re thinking of buying a new car then Personal Contract Hire is one of the most common options to finance your new vehicle. It is a type of car leasing agreement that is designed for you if you don’t want to tie up your money in your car and you don’t want the financial risks involved in owning your own vehicle.
Personal Contract Hire also offers a number of other benefits including the ability to drive a new car every 2-4 years. Our guide outlines six things that you should know about contract hire agreements.
You will generally need a lower initial payment
A Personal Contract Hire scheme will generally require a smaller deposit than other types of car finance.
If you have a good credit rating then your ‘deposit’ will generally be 3 months payments. However, if you have a less than perfect credit history then you may find that your initial payment is more than this.
Beware of the costs of exceeding your annual mileage
The monthly cost of your Personal Contract Hire agreement is based on the term of the plan and your anticipated annual mileage. This allows the car leasing company to work out the expected value of your car at the end of the agreement.
If you exceed your anticipated annual mileage then this will generally make your car worth less than expected at the end of the contract hire agreement. To counter this, you will pay an excess mileage charge for every mile over your limit that you drive. The charge will be on a ‘pence per mile’ basis and will be detailed in your contract.
Beware that these charges can be high and if you exceed your mileage limit by a large amount you could end up paying hundreds of pounds in charges.
Most Personal Contract Hire agreements will allow you to amend your contract at any time provided there are more than six months to go. You can generally move the mileage up or down and are also not restricted over the number of times you can do this.
You’ll need comprehensive car insurance
Under a Personal Contract Hire agreement you do not take ownership of the car. So, your car leasing company will generally insist that you take out comprehensive car loan insurance rather than a third party policy. This will generally make your insurance more expensive.
Consider a maintenance and Road Fund contract
Most Personal Contract Hire arrangements will let you add an optional maintenance package. This means that the costs of repair and servicing your car will be covered.
Most maintenance contracts have exceptions for wear and tear items but taking this additional cover means you have the peace of mind that repair and service costs will be met during the contract hire term.
Some Personal Contract Hire plans will automatically include your Road Fund licence for the duration of the agreement. Others will allow you to include this as an extra.
Check if there is a Document Fee
Always ask if there is a ‘document fee’ involved in your Personal Contract Hire agreement as some companies charge this.
If this fee does apply, your monthly rental payment could be higher than you think.
You won’t generally have the option of buying the car
Personal Contract Hire is a personal car leasing product. This means you make an initial payment and than a monthly car lease fee for the duration of your agreement.
One of the main differences between Personal Contract Hire and other types of car lease is that you will generally not have the option of buying the car at the end of the agreement. Instead, you will hand the car back to the leasing company.
This means you don’t have the hassle of disposing of the car. It also means that you can drive a new car every 2-4 years.
Author Bio:
Sherwood Garage provides people in search of used cars for sale Glasgow with the best selection they can choose from. For years now, Sherwood Garage have delivered the exceptional service of delivering admirable types of cars to our clients’ garages.
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Category: Car Lease
