We noticed some confusion over the term ‘contract hire’ and how it is different than ‘leasing’. Simply put, contract hire is a type of leasing (please see our post that explains car leasing). In the grand scheme of leasing, these are the main options:
|Personal contract hire (PCH)
Personal contract purchase (PCP)
How does contract hire work?
With contract hire, the vehicle is yours to drive but not to own. You choose a contract for an agreed period, mileage, and fixed monthly payment. At the end of the contract, the car must be returned to the leasing company.
How are payment amounts determined?
The amount to pay, usually every month, depends on a number of factors. First there’s the price of the car you’d have to pay if you were to buy it outright (retail value); then the estimated value at the end of the contract after depreciation and mileage costs, as well as the condition of the vehicle (residual value).
The amount you actually pay with contract hire is the difference between these two figures, spread across monthly instalments. If you’d like lower monthly payments, then you’d have a bigger deposit. Policies with the lowest monthly payments may not necessarily be the best; there are other things to consider such as maintenance, servicing, tyres and wear-and-tear plans.
Who is contract hire suitable for?
Contract hire suits drivers who are not interested in purchasing the vehicle. One of the most attractive benefits of leasing is that more expensive cars become more accessible, thanks to the affordable monthly payments. For more information, take a look at our article on the advantages of leasing.
What vehicles can I get on contract hire?
Yes Lease has built up an extensive partner network of funders, so we’re able to offer our customers highly competitive deals on a wide range of cars, including Mercedes-Benz, Peugeot, Mini and luxury cars like Ferrari, Lamborghini and Porsche.
In fact, Yes Lease has a price-matching service, where we aim to match quotes you’ve been given. Just call us on 01782 254444 to speak to one of our friendly team members, who can also advise on the best finance option for you.