Private car leasing — also known as personal contract hire or PCH — has become one of the most popular ways to drive a new car in the UK. Rather than buying outright or taking out a PCP finance deal, you pay a fixed monthly amount to use a vehicle for an agreed term, typically two to four years, before returning it and either leasing again or walking away. But is private car leasing the right choice? The pros and cons of PCH are worth understanding in full before you sign anything.
What Is Personal Contract Hire (PCH)?
Personal contract hire is a long-term car rental agreement. You agree to lease a specific vehicle for a set period and mileage. At the end of the contract, you hand the car back — there is no option to buy it, and no balloon payment to worry about. Monthly costs are determined by the vehicle’s expected depreciation over the lease term, your agreed annual mileage, and the initial rental (your upfront payment, usually equivalent to three to nine months).
Pros of Private Car Leasing
1. Lower monthly payments than PCP or HP
Because you are only paying for the vehicle’s depreciation rather than its full value, personal contract hire often produces lower monthly payments than hire purchase or PCP finance on the same car. This makes PCH one of the most affordable ways to drive a new vehicle.
2. Huge choice of vehicles
Unlike the Mobility price list, private leasing gives you access to virtually every new car on the market — any make, model, trim level, or colour combination. If you want a specific specification or a car that isn’t available through the Mobility scheme, PCH is the obvious alternative.
3. Always driving a new, reliable car
Like the Mobility scheme, PCH means you’re always in a relatively new vehicle. This avoids the large repair bills and depreciation associated with owning an older car outright.
4. No depreciation risk
Because you hand the car back at the end of the contract, you bear no risk from the vehicle losing value. This is particularly relevant for electric cars, where residual values are harder to predict.
5. Fixed monthly costs make budgeting simple
Your lease payment is fixed for the duration of the contract, making it easier to budget. You know exactly what the car will cost each month.
6. Potential tax benefits for business users
If you are self-employed or use the vehicle for business, there may be tax advantages to leasing rather than buying. VAT-registered businesses can often reclaim a portion of the VAT on lease payments.
7. No haggling over part-exchange value
Because you simply return the car at the end, there’s no need to negotiate a trade-in deal or worry about what your old car is worth.
Cons of Private Car Leasing
1. You never own the car
As with the Mobility scheme, the car is never yours. You build no equity and have nothing to sell at the end of the contract. For people who prefer to own an asset, this is the central drawback of PCH.
2. Mileage limits and excess mileage charges
Private leases come with a fixed annual mileage cap — commonly 8,000 to 15,000 miles per year. Exceed this and you’ll pay a per-mile excess charge at the end of the contract, which can add up to a significant sum. Accurate mileage estimation upfront is essential.
3. Credit check required
Unlike the Mobility scheme, private car leasing requires a credit check. Customers with poor credit history or no credit history may be declined or offered less favourable terms. This is a real barrier for some drivers.
4. Car insurance is not included
Unlike the Mobility scheme, personal contract hire does not include car insurance. You must arrange and pay for your own fully comprehensive car insurance policy separately — and because the car is leased, most insurers require fully comprehensive cover as a minimum. For some drivers, this adds significantly to the total monthly cost.
5. GAP insurance is strongly advisable
If your leased car is written off or stolen, your standard car insurance will pay out the current market value — which may be considerably less than the amount you still owe on the lease. GAP insurance covers this shortfall. It’s an additional cost that Mobility scheme customers don’t have to think about, but PCH customers should seriously consider.
6. Condition and damage charges
At the end of the lease, the vehicle is inspected against BVRLA fair wear and tear guidelines. Any damage deemed beyond normal wear can result in charges. Scratches, kerbed alloys, and interior damage are common sources of end-of-lease bills.
7. Early termination is expensive
If your circumstances change and you need to exit a PCH contract early, the penalties can be severe — often 50% or more of remaining monthly payments. Private leasing locks you in for the contract term.
8. Initial rental is required upfront
Most personal contract hire deals require an initial rental of three, six, or nine months’ worth of payments upfront. This lump sum can be a significant barrier compared to zero advance payment options on the Mobility scheme.
Private Lease vs Mobility Scheme – Which Is Better?
For disabled drivers who qualify for the Mobility scheme, the two options are worth comparing directly. Mobility wins on simplicity, included insurance, and no credit check. Private leasing wins on vehicle choice, flexibility, and — in some cases — overall value if you shop around for competitive lease deals and already have cheap car insurance. Running a side-by-side cost comparison using both options is the best way to find out which works out cheaper for your specific situation.
Private Lease vs PCP – Key Differences
Personal contract hire and PCP (personal contract purchase) are often confused. The key difference is that PCP includes an option to purchase the vehicle at the end of the contract by paying a final balloon payment. PCH has no such option — you simply hand the car back. PCP tends to have higher monthly payments but gives you the path to ownership if you want it. PCH is typically cheaper month-to-month if ownership isn’t a priority.
FAQ
Do I need good credit to lease a car privately?
Yes. Private car leasing requires a credit check. Most leasing companies look for a good credit history with no recent County Court Judgements (CCJs) or defaults.
Is car insurance included in a private lease?
No. Unlike the Mobility scheme, you must arrange your own fully comprehensive car insurance when leasing privately.
Do I need GAP insurance on a leased car?
GAP insurance is not mandatory but is strongly recommended. If the car is written off, it protects you from paying the difference between the insurance payout and what remains on the lease.
Can I lease an electric car privately?
Yes. Some of the best electric car lease deals are available through personal contract hire, including EVs from Tesla, Volkswagen, Hyundai, Kia, and many others. EV lease deals can be very competitive due to high residual values and manufacturer support.
What happens if I go over my mileage on a private lease?
You will be charged a per-mile excess fee at the end of the contract. This is set in your agreement and typically ranges from 5p to 30p per excess mile depending on the vehicle.