Guide to personal car leasing
Personal car leasing is a rental agreement, known as a Personal Contract Hire (PCH). PCH agreements allow you to drive a new car based on an agreed mileage over a set period, normally over two, three or four years.
What is personal car leasing?
Personal car leasing is a cost-effective way to drive a new car. You make fixed monthly payments over an agreed annual mileage, and you choose the deposit you want to pay. This is traditionally based on a no deposit (one rental) or three, six, nine or 12 advanced monthly payments.
Personal car leasing can be treated as a form of renting, in that you drive a new vehicle, for an agreed length of time normally covering a two, three, or four-year period.
You can choose your desired vehicle by make, model and specification. You customise your contract in terms of annual mileage, the length of the contract and whether you want to include a maintenance package that covers your routine servicing and tyre replacement for a set monthly cost.
All our personal car leasing deals include road tax and breakdown cover is usually included.
Personal contract hire agreements are calculated by:
- The OTR (On The Road) value of the vehicle at the start of the agreement
- Your initial advance rental you decide to put down
- Your agreed length of contract - two, three or four years
- Your agreed annual mileage
- Your admin fee
- Your estimated vehicle residual value at end of the contract
Also, as you don’t own the vehicle, you have no worries or concerns regarding depreciation or resale values at the end of your contract – you just hand the vehicle back.
As long as you’ve kept to the agreed mileage and there’s no damage to the vehicle outside of fair wear and tear, then the payments will cease and you’ll have no extra charges. We will send communication reminders six months and three months before your contract end date.
Why choose Vehicle Contracts for personal car leasing?
Vehicle Contracts was established in 1999 meaning we can provide expert advice and top-quality service with every business lease. With twenty years in the industry, we’ve built strong professional relationships with manufacturers, dealers, and leading finance and leasing companies.
Our relationships, along with our dedication to volume, mean we can negotiate the maximum discount for some of the most competitive rates on the market.
We average 4.8 out of 5 stars with our customer reviews thanks to our specialist, honest advice with every business lease deal.
Find out more about Vehicle Contracts and our history over on the about us page.
What are the potential benefits of personal car leasing?
There are many benefits to leasing a brand-new car. Below, you can see our top ten key advantages:
- You get to drive a brand-new car every few years, which means you get to drive the latest models with up-to-date technology and safety features - technology on cars forever changing so you can keep up to date with the latest fuel efficiencies and technologies.
- You can add a maintenance agreement to your contract that would cover all routine servicing and tyre replacement. A fixed monthly cost for the duration of your contract gives you peace of mind.
- You can pay less in upfront fees when you lease, compared to buying a vehicle. With our lease offers you can choose from as little as a one-month initial rental as your first payment.
- Most vehicles typically would lose around 50% of their value in the first three years. With car leasing, the depreciation of the car is not your financial burden as you do not own the vehicle.
- Most vehicles typically would lose around 50% of their value in the first three years. With car leasing, the depreciation of the car is not your financial burden as you do not own the vehicle.
- As with all new cars, an MOT is not needed until they are three years old - so you’ll likely never need to MOT your vehicle.
- With leasing vehicles supplied on a personal contract hire basis, they are supplied with road tax for the full duration of your contract.
- Delivery is included - this will be arranged to either your home or business address.
- You get to drive a new car every two to four years.
- You get the full benefits of the manufacturer’s warranty and manufacturer breakdown cover (if applicable).
- At the end of your contract, you will avoid the hassle of selling of your car - just arrange for collection and hand the keys back
What are the potential disadvantages of personal car leasing?
It is also important to understand that car leasing is not right for everyone. You should be aware that:
- You do not own the vehicle - at the end of your contract, you must hand the vehicle back.
- If you have a poor credit rating, then our finance providers may decline your application.
- You will need to take care of your vehicle, although wear and tear is taken into consideration, you may be charged for additional damages.
- Agreements are calculated on annual mileage. If you exceed the total contract mileage, you will have to pay the excess mileage charge. The excess mileage charge is calculated on a pence per mileage basis.
- Your contract will be for a specified number of years. Should you wish to terminate the contract earlier than the agreed term, the finance provider may apply an early termination fee.
How does personal car leasing work?
Leasing a vehicle is an easy process - you lease a car, pay a fixed monthly rental over the term agreed and return the vehicle at the end of the term agreed.
Below, you’ll find the full rental process:
- Choose your car
- Bespoke your lease terms to suit your budget and needs
- Supply your personal and financial details
- Take delivery and enjoy!
- Arrange collection of your car before the contract end date
Who is eligible for car leasing?
Car leasing eligibility requires the following criteria:
- You are aged 18 or over
- Hold a full valid UK driving licence
- Have a good to excellent credit score
- Have a regular, secured income including a pension
- Provide a minimum three-year traceable address history and employment/education history
- Have no IVAs, been made bankrupt or any registered CCJs on your credit file
- Have approval from one of our finance providers
Personal car leasing credit score limits
Personal application processes undergo a credit check to assess your credit rating, previous and current credit profiles and risk status. So long as you are up to date with any credit arrangements and you’re not overexposed, you will have no issues with leasing.
There are currently three main credit reference agencies in the UK that our finance funders use: Experian, Equifax and TransUnion. All three operate different scoring systems to reach a decision.
The information you provide is simple and straightforward
- Personal details
- Address details
- Employment details
- Bank details
- Income and expenditure
Which manufacturers are available for a business car lease?
Why should you lease a car instead of buying one?
One of the main benefits of leasing a car rather than buying one is the fixed costs. After paying your initial rental, the monthly payments will be fixed for the duration of the contract, subject to VAT and road tax changes. This allows you to budget without
Personal car leasing also offers a cost-effective way of obtaining a new car, using our discount terms, tailored contracts to suit your budget and the risk of depreciation is taken away from you. It's a win-win situation.
You still get the full benefits from leasing a new car as you do with buying - you get the full manufacturer’s warranty and guarantee - but you also get the standard manufacturer’s breakdown cover.
You can drive a brand-new car every two-four years without the worry of selling it or getting a part exchange value.
Your initial and ongoing monthly payments offer a lot lower overall cost than buying outright. Let’s face it your money is better off in your bank account than anyone else’s!
All personal contract hire agreements included road tax for the full duration of your contract. So, no need to worry about renewing your road tax - it’s automatically included and paid for.