Maintenance Contract Hire Leasing
You can either add “with maintenance” to your next contract hire leased vehicle or take the full risk on the servicing costs yourself. It's up to you which suits you best.
"With maintenance" contract hire normally includes all scheduled routine servicing, any mechanical repair, normal tyre replacement (not punctures), batteries and exhaust replacement, for the life of the contract.
There are also some exclusions to what the contract hire leasing company will pay for so do ask what is covered and what is not. For example, damage to the vehicle will not be paid for (see Contract Hire explained above for further help).
So, there are several factors to consider before deciding whether to build in “with maintenance” into your rental.
The useful guide below should help you make your decision depending on your own circumstances.
The basic questions to consider
- How reliable is the car or van you want to contract hire? New vehicles should not go wrong provided they are serviced in line with the manufacturer recommended servicing intervals, but sometimes they do. You should research the reliability of your new vehicle. (Try the car reliability section to help you or look at the J D Power survey).
- What are the servicing intervals for your next car or van? Some manufacturers are extending their servicing frequency, so you do not necessarily have to service the vehicle every year.
- How long is the standard manufacturer warranty period and what are the exclusions to the vehicle warranty?
- What mileage do you expect to do every year? If you expect to do lots of miles it is definitely worth considering building in “with maintenance” into your rental. For low mileage users, you will need to evaluate the costs a bit more.
This simple guide should help you either way
- The costs below are samples, to explain the principle of working out the benefits of "with maintenance" contract hire. You should estimate them yourself after your own research. You could phone your dealer and ask how much a full annual service is likely to cost for example.
- The example below has also been shown over a three year period. Shorter or longer periods will affect your results.
- The estimated costs of paying for your maintenance and servicing yourself include VAT at the prevailing rate. If you think there will be an increase or decrease in VAT in the future, your cost estimates should reflect this.
| The normal costs of car or van maintenance | What should you consider? | Estimate how much you will spend on these items in 3 years? |
| Routine servicing | There will be routine servicing costs and servicing labour rate guidelines do vary by manufacturer and dealer location. | £600 |
| Mechanical repair – things that go wrong | You will have to pay something to the repairer, to find out what is wrong, before having to foot the bill for the repair itself. Consider both costs. |
£300 |
| Tyres – normal wear and tear only (punctures and damage not paid for). | The current legal limit is 1.6mm so will you be travelling lots of miles and what is your driving style? |
£200 |
| Batteries | A new battery shouldn’t go wrong but how often will you be driving the vehicle? Long or short journeys and under what driving conditions? |
£50 |
| Exhausts | Again an exhaust should last for three years however this cannot be guaranteed. | £50 |
| “Protection” from the risk of a large mechanical failure | This is completely up to you whether you want to estimate something, for not having to worry about your future maintenance bills | £100 |
| Total estimated costs? | £1300 |
Results and comments
- On the above example, on a 3 year contract hire term, with 3 initial payments followed by 35 subsequent payments you should allow £34.21 per month (i.e. £1300 divided by 38 payments).
- VAT is added to all maintenance contract hire rental payments.
- The maintenance rental on contract hire is fully recoverable under current rules.
- If you are a personal or private user you should take off the VAT i.e. divide £34.21 by 1.15 = £29.75 as you have to pay the full rental including VAT and cannot recover this cost.
- Now get a quote for both “with” and “without maintenance” and see if it is worth adding the fixed maintenance contract hire payment to your rental.
Compare Contract hire Ltd cannot be held responsible in any way concerning the accuracy of the above information.
Why not try our quote shoppers to find a vehicle?
