Why Personal Contract Hire?

Alongside buying a house, a car is one of the most expensive single purchases people will make. The rules also suggest that it is also the quickest depreciating item and loses value as soon as it is driven off the showroom forecourt. Personal contract hire is one of the ways of negating the effects of depreciation when looking at a new car.

Personal Contract Hire operates the same manner as Company Contract Hire expects the vehicle is solely for private individuals. Personal Contract Hire means that you take responsibility for the lease of a car over a specific period, after which you simply return the car to the dealer.

The dealer calculates the value of the car once the contract period has ended, a part of this calculation is that drivers agree to stick to a specific annual mileage; failure to do this will incur certain costs. 

The benefits are that both new and used cars can be hired on a fixed price cost, which tends to be lower than a personal loan. Road tax and maintenance can be included in the agreement and as you will not have to sell the car at the end of the agreement there are no depreciation worries.

Lower costs mean you can perhaps lease a more expensive car than would ordinarily be available to you under a purchase agreement.

There is of course the fact that under these agreements you will never own the car or have the option to buy it and will have to take out fully comprehensive car insurance