PCH (Personal Contract Hire) Explained: The UK Guide to Car Leasing

Personal Contract Hire (PCH) is the simplest form of car leasing available to UK consumers. You agree to rent a brand-new car for a fixed period, make fixed monthly payments, and hand it back at the end. There is no option to buy — you never own the car.

PCH has grown enormously in popularity because it offers predictable costs, access to new cars, and removes the hassle of selling a car when you want to change. But it is not right for everyone.

How PCH Works

1. Choose your car, term, and mileage. You pick the car, colour, and specification. You then choose a contract length (typically 24, 36, or 48 months) and an annual mileage limit (typically 8,000 to 15,000 miles).
2. Pay an initial rental. This is usually expressed as a multiple of your monthly payment. For example, a “3+35” deal means 3 months upfront followed by 35 monthly payments. A “6+35” deal means 6 months upfront followed by 35 months.
3. Make fixed monthly payments. Your payment stays the same for the entire contract. Road tax is included. Insurance and fuel are not.
4. Hand the car back. At the end of the contract, the leasing company arranges a collection. The car is inspected, and you are charged for any damage beyond fair wear and tear, or excess mileage.

What Is Included in PCH?

Typical PCH Costs

Monthly PCH payments vary enormously depending on the car, mileage, and term. Here are some typical examples for popular models on a 36-month, 10,000 miles per year contract:

Prices are indicative and vary by specification, mileage, and dealer. Check current offers for accurate pricing.

Mileage Limits and Excess Charges

Your annual mileage limit is agreed at the start of the contract. Common options are 8,000, 10,000, 12,000, or 15,000 miles per year. If you exceed your total mileage allowance over the contract, you will pay an excess mileage charge at handback.

Excess mileage rates are typically 5–15p per mile depending on the car. On a premium model, this can be 12–15p per mile. Exceeding your limit by 5,000 miles on a BMW at 12p per mile would cost you £600.

Condition at Handback: BVRLA Fair Wear and Tear

When you return a PCH car, it is inspected against the BVRLA (British Vehicle Rental and Leasing Association) fair wear and tear guidelines. These are the industry standard and allow for reasonable use:

• Acceptable: Minor scratches shorter than 25mm that have not penetrated the base coat, small stone chips, light scuffs on bumpers, minor interior wear
• Not acceptable: Dents, scratches that have gone through the paint, cracked or chipped windscreens, kerbed alloy wheels, burns, stains or tears in the interior, missing service stamps

End of Lease Options

With PCH, your only option at the end is to hand the car back. Unlike PCP, there is no option to buy the car. However, you can typically:

• Start a new lease — Many drivers roll from one PCH deal to the next, always driving a relatively new car
• Extend your current lease — Some providers allow short extensions (3–6 months) if you need more time before starting a new deal
• Walk away — Simply hand the car back and drive something else (or nothing at all)

Pros and Cons of PCH

Final Thoughts

PCH is a clean, simple way to drive a new car without the risks of ownership. It works best for drivers who cover a predictable mileage, look after their cars, and are happy changing every few years. If you want the option to own the car or think you might exceed your mileage limit, PCP may be a better fit.