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Prestige and Rare, Vans, and Green Cars available from Contract Hire UK
Personal Contract Hire
As contract hire or business contract hire has become a major source of vehicle funding and provision for the business and corporate market, the private individual is now increasingly looking to the business contract hire providers for his or her personal motoring needs. Although the market is still popularly known as contract hire, personal contract hire products are labelled as personal contract hire, personal contract purchase and personal hire purchase and these are the main divisions into which the personal contract hire market falls.
In each case personal contract hire, personal contract purchase or hire purchase are still widely referred to by the general public as “contract hire” and indeed the products are virtually identical to those available to the business and corporate market. The main, and in our case the only difference, is the VAT charge of 17.5% which is levied on the personal contract hire, personal contract purchase and hire purchase contracts. Some contract hire providers will increase the rentals for the private hirer by more than the prevailing rate of VAT, we do not.
A personal contract hire contract works in the same way as a business contract hire, whereby a vehicle is supplied for a fixed term for an agreed monthly payment. The monthly rentals are calculated using the purchase price of the vehicle, the projected annual mileage and any contract ‘add-ons’ the client requires such as service, maintenance and repairs (including tyres); additional breakdown cover, roadside assistance and relief vehicle. Personal contract hire terms typically run from between 24 and 60 months, with the option of any duration between these times.
All tyres of personal contract hire, personal contract purchase and personal hire purchase will start with an initial payment before delivery of the vehicle, followed by one monthly payment for each month of the personal contract hire contract duration. Usually this initial payment is a sum equivalent to three monthly payments – although this amount may differ in the case of a personal hire purchase agreement. Additionally, personal contract hire contracts will always include the road fund licence for the whole of the contract, with subsequent licences being posted directly to the contract holder – subsequent licences are usually not included in personal contract purchase or personal hire purchase contracts, however.
A personal contract hire agreement benefits the private individual in many ways. There is a minimal initial outlay (as described above), a capital sum from, perhaps, a savings account is not required. The private individual will have no worries about depreciation or disposal of the vehicle, and will know their monthly and annual motor vehicle costs, with the only variables being fuel and insurance, plus maintenance and tyres if not included in the contracted monthly payments. When the personal contract hire agreement is drawing to a close we will contact the end user to discuss their options. With a personal contract hire the user hands the vehicle back to their funder and then has the option of arranging a new personal contract hire, starting on the date that the old one expires normally, or to hand the car back and “walk away”. In either case, we will arrange collection of the vehicle from a convenient location at the end of the contract.
A personal contract purchase has very similar benefits to those of a personal contract hire, the main difference being that at the end of the personal contract purchase agreement the end user has the option to purchase the value for a guaranteed future value – more usually referred to as the “balloon figure”. The monthly rentals are calculated in exactly the same way as for a personal contract hire, namely using the purchase price of the vehicle, the projected annual mileage and the inclusion of any optional add-ons to determine the monthly payments. At this time the “balloon figure” is known and given to the client - thus at the end of the personal contract purchase period the vehicle may be purchased or returned without further charge.
A personal hire purchase agreement works in a slightly different way to the two options described above. The monthly payments are determined by the vehicle’s purchase price plus the interest charges on the borrowed amount, less the amount of the initial payment. The balance is then split into equal monthly instalments and at the end of the personal hire purchase agreement the vehicle then becomes the property of the person who paid those instalments. The first road fund licence will be supplied with the vehicle but second and subsequent licences will be the responsibility of the end-user. This method of funding is becoming less popular, owing to the depreciation and disposal issues involved.
At the end of a personal contract hire agreement and also at the end of a personal contract purchase agreement (where the end-user has not exercised the option to purchase) there may be excess mileage charges and/or de-hire charges, which will be invoiced after collection. Each contract, whether personal contract hire or personal contract purchase, will have the excess mileage charges clearly shown in ‘pence per mile’ and the end-user will be liable for these charges if the contract mileage has been exceeded. These charges will not apply if the personal contract purchase vehicle is bought and do not apply to personal hire purchase agreements, where the mileage is not a factor of the original contract. About three months before the end of the personal contract hire or personal contract purchase agreement the end-user is contacted to discuss their replacement options, and at this time a de-hire guide provided to help with the end of contract process. Personal hire purchase users will also be contacted to see if they would prefer to dispose of their vehicle once they have full ownership and we are often able to help with this if the client elects to take another personal contract hire, personal contract purchase or personal hire purchase agreement with Contract Hire UK.
Personal contract hire and personal contract purchase agreements are a popular choice for those individuals who receive a car allowance from their employer. This allowance can then be used to fund all or part of the monthly rentals.
Each and every client, both personal and business, receives personal attention from their own dedicated account manager, who will give advice and can provide quotations on the vehicle or vehicles in which the client is interested, explaining personal contract hire options from the initial enquiry through to the contract stage, where our experienced contract and administration team take over. Additionally our Customer Care team is on hand to answer any questions that may arise during the life of the personal contract hire.
All the vehicles supplied by Contract Hire UK are sourced from UK based franchised main dealers, who will deliver the car directly to your home address, place of work or other convenient location, although you can, if preferred, travel to collect the vehicle yourself and we will happily arrange this for you. Using this dealer network and our buying power enables us to secure the best possible discounted price for our clients and their personal contract hire, personal contract purchase or personal hire purchase requirements; just as having access to major funders ensures that we are able to offer highly competitive monthly payment rates. By taking a personal contract hire, personal contract purchase or personal hire purchase agreement our clients have often found that they are able to afford a vehicle which they previously had considered to be out of their reach – as in business contract hire, personal contract agreements often make the previously unaffordable affordable.
