Car Finance Rental Agreement

Ending a PCH prematurely means you may have to pay the full rental fee, so think very carefully before terminating the contract and find out exactly what that total cost would be. As long as you have (or can pay) half the cost of the car, you have the right to return it. For a PCH, other fees may be charged, so check your agreement. Personal Car Leasing or Personal Contract Hire (PCH) is a long-term rental agreement in which you rent a car or van of your choice for an agreed period (usually between 2 and 5 years). With PCP, you make a first deposit followed by fixed monthly payments. If you wish to purchase the vehicle directly at the end of the agreement, you must make a final “balloon payment” covering the total residual value of the car or van. With leasing, you get access to some of the newest vehicles for an affordable monthly payment. Once the agreement is concluded, you can immediately drive another car, which means that you can have a new vehicle on the same day. Four out of five people with PCP plans do not choose to buy the car at the end of the contract (source: The Finance and Leasing Association). Is it likely that you will be one of them? If so, leasing a car by personal contract rental (PCH) may be cheaper for you. Be careful, though.

If you can`t afford to pay PCH`s monthly payments and need to terminate the agreement, you may have to pay the full rental fee, which would end up costing you more. Under a finance lease, you may choose to pay the full cost of the vehicle, including interest charges, over an agreed period. You can also pay lower monthly rents with a final payment based on the expected resale value of the vehicle (also known as a “balloon payment”). Throughout the contract, the vehicle remains the property of the leasing company….