What happens if the car is damaged at the end of a PCH agreement?

Fair wear and tear are accepted, but any excessive damage may mean you have to fork out for repair costs. Keep the vehicle in good condition to avoid unexpected fees at the end of your contract.

Do I need a good credit score for PCH finance?

Most lenders require a good credit score to approve a PCH application. If you have poor credit, you may still be able to secure a lease, but you might face higher initial payments or stricter terms. At Car Finance 247 we don’t currently offer PCH, however we work with lenders who specialise in bad credit car finance and could be able to offer you an alternative. Credit is subject to status.

Can you end a PCH contract early?

Sometimes, yes, but ending a PCH contract early can come with penalties. You may need to pay an early termination fee, which varies depending on the lender company and how much time remains on your contract.

What happens if I exceed my mileage limit on a PCH deal?

If you exceed the agreed mileage limit, you’ll likely be charged a fee per extra mile. This cost will be outlined in your contract, so it’s important to estimate your mileage accurately before you sign an agreement.

What is Personal Contract Hire (PCH) car finance?

Written by Joe Achillies Updated 17 Jun 2025

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If you’re looking for a flexible and potentially more affordable way to get on the road, Personal Contract Hire (PCH) could be perfect for you.

Whilst we don’t currently offer PCH at Car Finance 247, this guide will help you understand what PCH is, how it works, and whether it could be the right car finance option for you. From exploring the benefits of PCH cars to comparing it with PCP and HP, we’ve outlined all you need to make an informed decision.

What is PCH car finance?

PCH car finance is where you lease a vehicle for a fixed term, and you don’t have the option to buy it at the end of your financial agreement.

It’s essentially a long-term rental where you pay an upfront deposit and monthly payments for the use of the car. At the end of the term, you return the car.

How does PCH work?

PCH cars are leased for a set period. You’ll agree to make an initial upfront payment, followed by monthly instalments. These payments are calculated based on:

Annual mileage – The more miles you agree to, the higher the monthly cost. Exceeding the limit results in extra charges.
Contract duration – Longer contracts can lower monthly payments but may limit flexibility.
Initial payment – Paying more upfront can reduce monthly payments.
Vehicle choice – Higher-value cars have higher lease costs.

Once the contract ends, you can either return the car and walk away or start a new lease with another vehicle. This flexibility can make PCH car deals an attractive option for many drivers.

Mileage and PCH:

Mileage is an important factor with PCH. When you take out a PCH deal, you’ll agree to set an annual mileage limit for the duration of the contract that suits your driving habits.

Lower mileage limits could usually mean lower monthly payments. Higher mileage limits raise the cost, simply because the more you drive, the more wear and tear the car will have.

It’s important to note that if you exceed the agreed mileage, you’ll be charged an excess mileage fee, usually calculated per mile over the limit. Some lenders allow you to adjust your mileage limit mid-contract, but this might increase your monthly payment.

Is PCH right for you?

PCH finance could be a great solution if you’re looking for a hassle-free way to drive a new car without the commitment of ownership.

Like anything, there are pros and cons to PCH. Here are some considerations to help you decide if it’s the right option for you.

The benefits of PCH:

You’re free to change car regularly
You don’t have to worry about reselling the car or about depreciation
Monthly costs are often lower than they would be with other finance options
You might be able to drive a car you wouldn’t usually be able to afford

Potential downsides to PCH:

You won’t be able to buy the car at the end of your lease
Exceeding the agreed mileage can result in additional charges
You’ll have to pay extra for any damage
If you don’t keep up with your repayments, the finance company could take your car back
You’ll be tied in for the full length of your lease and may have to pay extra if you want to end it early

Alternative car finance options to PCH

PCH not for you? Don’t worry, there are plenty more car finance options out there, including Personal Contract Purchase and Hire Purchase. Here’s a comparison to help you decide:

Personal Contract Purchase (PCP):

If you’re a careful driver looking for a flexible finance option, PCP could work for you. You’ll usually pay a deposit and monthly payments for a certain length of time, plus interest.

Then, at the end of your agreement, you can choose to buy the car, return it, or trade it in for a new one. Terms and conditions will apply – you’ll need to agree to a set mileage and not damage the car to avoid extra charges.

PCH vs. PCP: What's the difference?

Ownership: With PCH, you never own the car. PCP gives you the option to buy the car by making a final balloon payment at the end of the agreement.
Flexibility: PCH is ideal for those who want a fixed-term rental, while PCP may suit drivers who are unsure whether they want to own the car.
Cost: PCH deals often have lower monthly payments compared to PCP, but there’s no equity or trade-in value at the end.

Hire Purchase (HP):

Want to own the car at the end of your agreement? Hire Purchase (HP) could be for you. With HP, you typically pay a deposit and monthly payments, plus interest. But, once you've made all the payments, plus a final 'option to purchase' fee, you own the car.

PCH vs. HP: What's the difference?

Ownership: PCH requires you to return the car, whereas HP means you always keep the vehicle once the final payment is made.
Flexibility: PCH is ideal for those who like driving a new car every few years, while HP suits those who want long-term ownership.
Cost: PCH typically has lower monthly payments since you’re only covering the car’s depreciation. HP payments are usually higher as you’re paying towards full ownership.

Ready to explore your car finance options? Get your quote now or give us a call!