Business Contract Hire by Compare Contract Hire

Car or Van Contract Hire is simply a method of long term rental offering you a fixed monthly rental payment for the vehicle you want. You can choose how long you want to keep the vehicle for and simply send it back and order a new vehicle at the end of the contract.

Why buy or own a car or van when they will lose value over time?

Contract Hire protects you from the depreciation risk of owning a vehicle and can include maintenance cover/breakdown cover (optional), vehicle excise duty and much more.This method of vehicle funding is ideal for companies who do not want to tie up capital nor have the financial risk of running their own car or van fleets.

Reduce the administration of buying, servicing (if part of the contract) and disposing of vehicles by contract hiring. Just hand the vehicle back at the end of the contract and order a brand new vehicle - it's as easy as that!

Below are a list of benefits of contract hire and also the things you do need to know about this method of car or van vehicle finance. Please have a look at the points so you are fully informed about this subject.

You may also want to look at the Contract Hire Jargon Buster under the Useful Information section as this explains many of the terms you will hear.

 

Benefits


  • Even though a vehicle actually costs more to buy, the contract hire rental for a more expensive vehicle may be less, due to the method of setting a contract hire rental.
  • Contract Hire initial payment is usually three months rental but flexibility can be offered on deposits.
  • Thereafter one fixed monthly payment, payable by direct debit, covers most costs providing better cash flow forecasting.
  • Enjoy the contract hire and leasing company purchasing spend power and discounts as they buy in bulk.
  • Freedom from disposal worries and risk as the job of selling the vehicle is down to the contract hire and leasing company.
  • The driver of the vehicle may be able to buy the vehicle at the of the contract subject to the purchase price offered by the contract hire company being acceptable to both parties.
  • The Contract hire leasing company recovers the VAT on the vehicle purchase, which means the vehicle costs less to finance. This benefit is passed on in a lower rental to you.
  • Off balance sheet financing which is useful when your company has high borrowings elsewhere.
  • Reduced administration and risk as maintenance, mechanical repair, replacement car, breakdown recovery, tyres, batteries and exhausts can be part of the contract hire package. 
  • Vehicle Excise Duty (Road Fund Licence) is normally included on either non maintenance or with maintenance contract hire.
  • If you choose an annual mileage and perform at a higher or lower level, the Contract Hire company will normally amend the contract rental for you, to reflect this.
  • The car or van is usually delivered nationwide to your door free of charge (UK Mainland) and at the end of the contract it can also be collected.

 

Things you need to know


  • Always check the annual mileage and the total number of the contract hire monthly payments you will be making (including the initial deposit rental), if obtaining other quotations elsewhere, to ensure you are comparing like for like.
  • Always ask if there is a document fee involved as if you divide this fee by the number of months in your contract the "actual monthly" rental is higher than you think. 
  • VAT registered companies can only recover 50% of the VAT on the finance rental (100% on maintenance).
  • Business Contract Hire is a fixed contract to term and mileage. Go over the contract mileage and you will pay an excess mileage charge.
  • There will be a charge, if you return the vehicle early to the contract hire company and this will vary between different companies.
  • If you opt for a non maintenance contract then if the vehicle breaks down it is up to you to fix it.
  • If you don't opt for breakdown cover as part of your contract check what the manufacturer offers FOC (normally first year only but varies).
  • If you damage the vehicle, it needs repairing and it is your fault, then this is not covered under the “with maintenance” contract.
  • Glass and windscreen replacement is not normally covered under the "with maintenance" contract. 
  • If you return the vehicle in a damaged condition, other than "Fair, Wear and Tear", you may be liable for a bill.
  • You need to insure the vehicle in line with the contract hire company requirements.
  • If the vehicle is written off for any reason, you may be liable for the difference between the vehicle book value of the contract hire company and what your insurance company pays out.
  • Not all the rentals you pay can be offset against your company profits, as there is a sliding scale restriction on the allowances for more costly cars over £12,000. 
  • From April 2009, carbon emissions of company cars will impact the tax relief available for businesses as well as the tax charge on the individual.
  • This will replace the current sliding scale system and will move to a new 15% restriction for contract hired cars with CO2 emissions over 160g/km. Therefore companies will find contract hire is more tax effective for more expensive vehicles than before.

 


Compare Contract Hire Ltd cannot be held responsible in any way concerning the accuracy of the above information. Please seek professional advice from your accountant.

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Business Car or Van Contract Hire Leasing explained simply by Compare Contract Hire

Why buyacar or buyavan?

Deciding how to fund your next car or van can be difficult with the many vehicle finance choices available. Business Car or Van Contract Hire Leasing covers depreciation risk, maintenance cover and breakdown cover (optional), vehicle excise duty, administration and much more.

Compare Contract Hire specialises in only showing car or van contracthireandlease rentals for business or personal users. The simple guide above will give you a brief overview of the benefits of car or van contract hire leasing and also show you some of the things you need to know before making your final decision.

Many businesses choose to use contract hire car and van leasing as their preferred method of vehicle funding as it offers fixed cost motoring and peace of mind. Ideal in the current economic climate of financial uncertainty.

Enjoy cost effective contract hire car or van vehicle leasing for businesses or private individuals by using the Compare Contract Hire quote engines to find your next car or van.

Once you have decided that car or van contracthireandleasing is right for you, check out the Compare Contract Hire quote engine or the Car or Van Special Offers section to either compare more contract hire quotes or get a cracking deal on Audi leasing, BMW leasing, Mercedes Leasing, you choose which model. Compare Contract Hire recommends you speak to your accountant before choosing this method of car or van vehicle finance.

Compare car and van contract hire lease quotes instantly with multiple funders to get the best deal to save you time and money.

The top ten things to remember about business and personal contract hire.

  1. Business Contract Hire is a form or rental - you are not buying the car or van.
  2. Business Contract Hire companies recover the VAT when they buy the vehicle and this benefit is passed on to you in a lower contract hire rental. There are some VAT recovery restrictions on the rental.
  3. Business Contract Hire can give you fixed cost motoring as all you do is pay one monthly contract hire rental.
  4. Business Contract Hire is fixed to an annual mileage. Go over the contract hire annual mileage allowed and you will pay a charge.
  5. The risk of selling the vehicle at the end of the contract is down to the Contract Hire companies.
  6. Business Contract Hire can cover most things like all routine servicing, mechanical repair,tyres, batteries and exhausts.
  7. The road fund licence is normally included for the contract hire arrangement.
  8. Business Contract Hire is great if you don't want to tie up loads of cash in a vehicle as when you buy a car or van they lose value over time.
  9. Business Contract Hire can allow you to drive a better car or van than you think because of the way each leasing company sets the resale or residual value of the vehicle.
  10. Business Contract Hire can be referred to as car or van leasing and is becoming more popular for small businesses and private buyers interested in car leasing.

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