It is the most common form of car leasing and usually when the term ‘car leasing’ is referred to, most people are talking about personal contract hire.

With a personal contract hire agreement you take control of a car for a contractual period, usually referred to as the ‘lease period’. Though the car is in your possession, it is not actually yours to own. Instead, you make fixed monthly payments to a leasing company such as CVC Direct for the duration of the contract and when the contract expires you simply return the car to the leasing company or take out a new personal contract hire lease. As a result you never have to worry about resale values of the car because you never own it, so you can simply return it and walk away.

It’s important to understand how your payments are determined.

We will work out the ‘residual value’ of the vehicle which is its value at the end of the contractual period once depreciation is taken into account. To estimate this value, the company will ask you to stick to a strict mileage limit while you drive the car as exceeding this limit could see you penalised at the end of the term.

To determine your payments, we will deduct the estimated future value (residual value) from the retail price of the car and you pay the difference in monthly installments.