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Business Car Leasing or Personal Car Leasing?

BUSINESS CONTRACT HIRE – (BUSINESS CAR LEASING, CAR LEASING, BUSINESS LEASE CAR, BCH)

Business Contract Hire (BCH) is a popular option for business enabling them to finance their vehicles with an initial down payment whilst agreeing to the vehicle’s mileage for the duration of the contract. 

Minimum payment for Business Contract Hire usually consists of 3 payments on the business car lease in advance but exact costs depends on the type of contract taken out and can be up to 9 payments upfront or as low as 1 payment.

All business car leasing deals are calculated over either 2 or 3 year periods and are described as 3+23 or 3+35 contracts. This means 3 payments are made in advance then the contract continues with 23 or 35 payments for the rest of the lease term.

Mileage allowance is always agreed in advance with the minimum and maximum mileages being 5,000 per annum and upto 120,000 miles over the contract term. Any excess mileage over the agreed limit is billed at an excess mileage rate depending on the vehicle and contract length.

Business Contract Hire (BCH) is subject to VAT where 50% can be reclaimed, this is called “blocked VAT”. At the end of the agreed contract period the business lease car is returned to the finance company. Any damage to the business lease vehicle must be repaired prior to the end of the contract or an additional cost will be charged to cover this. It is recommended that businesses consult with their accountant for the full benefits of Business Contract Hire.

PERSONAL CONTRACT HIRE – (PERSONAL CAR LEASING, PERSONAL LEASE CAR, PCH)

Personal Contract Hire (PCH) is the same as business contract hire, except with the option of being able to reclaim the blocked VAT.

Personal Contract Hire (PCH) prices are always displayed with VAT included as the deals on personal car leasing work similarly to business contract hire. The payments are usually 3 upfront with 23 or 35 payments over the rest of the 2 or 3 year contracts respectively.

Mileage is agreed prior to the contract being signed and similarly to business contracts, the minimum mileage is 5,000 per annum and the maximum is 120,000 over the contract term. Any excess mileage over the agreed amount is billed at the end of the contract.

Personal Contract Hire (PCH) is not PCP (Personal Contract Purchase) which is a different type of agreement.

Personal Contract Hire (PCH) means that you are required to return the car to the finance company at the end of the contract. It is effectively a long term rental of a car.