Leasing Explained


Personal leasing is an increasingly popular way to drive a new car at an affordable cost. But how does it work?

At LeaseMyCar, we offer a type of personal leasing agreement called Personal Contract Hire ('PCH'). Other types of car finance are available and explained on this page, but we do not offer these at this time.

Hire Purchase ('HP') agreements allow you to buy the car by spreading the cost of the vehicle, with you owning the car at the end of the agreement.

Personal Contract Purchase ('PCP') allows you to defer a portion of the cost of the car to a balloon payment at the end of the contract when you have the option to buy the car by paying the balloon payment, hand it back or part exchange the car for a new one.

Below is an overview of PCH, along with a description of other vehicle financing options that are available; however at LeaseMyCar, we only offer Personal Contract Hire (PCH).


Personal Contract Hire (PCH)

Personal Contract Hire Explained

PCH is becoming an increasingly popular way to drive away in a new car. It offers a pure lease arrangement, with no option to own the car as part of the scheme.


FEATURES


Fixed repayments
At the beginning of the agreement, both the amount you pay every month, and the repayment period, is fixed and will not change. This is great for your budgeting.

Fixed Term
You decide how long you want to lease the car for, and we set the contract up accordingly. Think carefully about how long you want to keep the car as it can be expensive if you wish to change early.

Lower repayments
As this plan doesn't cover any ownership option, your monthly payments will be lower than on a comparable purchased-based finance plan.

No long-term commitment
Once you have decided how much you wish to spend, and how many miles you do every month, you don't have to worry about what to do at the end of the plan. When it finishes, you give the car back, enabling you to start another agreement on a different vehicle if you wish, or simply walk away.

Wear & Tear
It is in your interest to minimise the vehicle’s 'wear and tear' and not exceed the agreed mileage. When the agreement has finished, if you have exceeded the agreed mileage you will need to pay an excess mileage charge.
In simple terms 'normal wear and tear' means that for its age and mileage, the vehicle is in fair working order, condition and repair. If not, there may be additional monies to pay.

Hire Purchase (HP)

Hire Purchase Explained

HP is a popular way of spreading the cost of your car. Just decide how much you want to borrow (you don’t always need to pay a deposit) and repay with fixed monthly payments over any period up to 60 months. At the end of the contract the car is yours.


FEATURES


Fixed repayments
At the beginning of the agreement, both the amount you pay every month, and the repayment period, is fixed and will not change. This is great for your budgeting.

Fixed Interest
Even if interest rates go up, the interest rate on your finance repayments will not be affected.

Flexible Payments Terms
Choose any period from 12 months to 60 months to suit your budget. You work out what you want to pay each month and we’ll work out how many months to repay it over to get you into your ideal car.

Ultimate Ownership
Once you have made all the repayments, you own your car.

Personal Contract Purchase (PCP)

Personal Contract Purchase Explained

PCP works by deferring a proportion of the car’s total value until the end of the agreement as an optional final payment. This amount is the Guaranteed Future Value (GFV) and is the key to how PCP works. PCP also offers great flexibility at the end of the contract.

HOW IT WORKS


PCP has been developed to allow you to change your vehicle more often than other forms of finance as effectively all you are paying for is the depreciation of the vehicle, and you have the comfort of knowing that we will guarantee to buy back your car back at the end of the contract at a pre-agreed price set at the start. This price is known as the "Optional Final Payment" (OFP).

The contract can be set from 24 to 48 months allowing you the flexibility to decide how long you would like to keep the car before you change it. When you reach the end of the contract you then have three options:

  1. Retain: Pay the Optional Final Payment and the car is yours.
  2. Return: Give the car back with nothing to pay (subject to mileage and fair wear and tear).
  3. Renew: Part-exchange your car and use any equity as a deposit on your next new car.

FEATURES


Excess Mileage
At the beginning of the agreement, you decide on the total mileage you expect to do. It is normal to pay a fixed amount for every additional mile over this agreed amount, so bear this in mind if you hand your vehicle back at the end of your contract.

Wear & Tear
It is in your interest to minimise the vehicle’s wear and tear and not exceed the agreed mileage. In simple terms 'normal wear and tear' means that for its age and mileage, the vehicle is in fair working order, condition and repair.