Contract Hire Definition
Contract Hire is a popular method of fleet funding and can be used to finance a car or a van. It is ideal for any small business or larger organisation that does not want to undertake the risk associated with the resale of vehicles, or the future maintenance and servicing costs. It is also a form of "operational leasing".
In a contract hire agreement all you do is simply hire the vehicle from the vehicle leasing company for a pre-determined period, usually between 12-60 months and at a fixed monthly rate and contracted annual mileage. At the end of the agreement you just return the vehicle to the leasing company.
You can also add in other services like a full maintenance package, including routine maintenance and servicing, mechanical repair, tyres batteries and exhausts, plus AA or RAC cover for the full contract term. Or, for a small additional monthly fee, the leasing company can also provide you with a replacement (or relief) vehicle for an accident, mechanical failure or both. There is usually a restriction on the time period for the replacement vehicle so do check this with the relevant vehicle leasing company.
It is important to choose a car or van with a CO2 g/km figure less than 160g/km, as there is a 15% restriction on the amount of rentals you can offset against your company profits (to reduce your tax liability). With cars with a CO2 figure of 160g/km or less, 100% of the rental is allowable as an "expense".
The major benefits of business contract hire are listed below
- Fixed monthly costs allowing you to budget more effectively.
- It is also VAT-efficient for most organisations.
- There is no residual value risk as the leasing company is responsible for this.
- Additional services like "maintenance included" can be added.
- There is usually a low initial outlay (initial rental to pay) enabling you to drive a brand new vehicle more easily.
- Contract hiring can provide an alternative credit line for funding and can release up credit lines elsewhere.
- You usually get one monthly invoice for all your vehicles reducing administration.
- Finally, currently the asset does not appear on your balance sheet.
A sample of our latest BMW contract hire prices are shown below.
From £242.78 ex. VAT
From £248.41 ex. VAT
From £271.02 ex. VAT
From £292.42 ex. VAT
From £299.40 ex. VAT
From £306.16 ex. VAT
From £309.91 ex. VAT
From £319.41 ex. VAT
From £325.38 ex. VAT
From £333.90 ex. VAT
From £339.32 ex. VAT
From £341.01 ex. VAT
From £342.23 ex. VAT
From £349.46 ex. VAT
From £358.27 ex. VAT
From £368.95 ex. VAT
From £383.20 ex. VAT
From £393.03 ex. VAT
From £393.27 ex. VAT
From £427.05 ex. VAT
From £437.88 ex. VAT
From £440.08 ex. VAT
From £452.87 ex. VAT
From £546.00 ex. VAT
From £549.78 ex. VAT
From £564.45 ex. VAT
From £567.31 ex. VAT
From £575.90 ex. VAT
From £594.28 ex. VAT
From £628.31 ex. VAT
From £631.97 ex. VAT
From £659.04 ex. VAT
From £663.06 ex. VAT
From £700.98 ex. VAT
From £703.84 ex. VAT
From £713.42 ex. VAT
From £738.53 ex. VAT