What is Maintenance Contract Hire?
First of all, contract hire is a method of financing a new car or van and is a popular method of fleet funding. It is ideal for companies who do not want to undertake the risks associated in running a fleet of vehicles, however small that fleet may be.
There are several types of contract hire options, one of which is maintenance contract hire. If you opt for a non-maintained contract hire agreement, then all mechanical repair, routine servicing costs, tyre replacement, batteries, exhaust repair and replacement, is your responsibility.
With maintenance contract hire, all you do is pay an extra fixed monthly rental, roughly around 5.5% of the non-maintenance contract hire rental, which covers all the above items. Each leasing company will operate in a slightly different way with maintenance contract hire, however here are some general guidelines that should help you decide if you want to build this into your rental.
- The contract hire leasing company will pay for all manufacturer routine servicing, mechanical repair, tyres, batteries and exhausts, in line with the vehicle manufacturer recommended servicing intervals, under a maintenance contract hire contract.
- The normal process is that you book your vehicle into a nominated dealer that the contract hire company recommends. You can call your leasing company to confirm if your local dealer is on their approved repairer list.
- Your vehicle is checked in at the dealer, as if you owned the vehicle, and the work will then be carried out as normal.
- Items that the vehicle leasing company will not pay for will be detailed in their respective Master Hiring Agreements (leasing agreements), so always read the agreement.
- These items will include damage to the vehicle. For example it is your responsibility, as the driver, to check the oil in your car or van. If you have forgotten to do this and the vehicle runs out of oil, and the engine then seizes, the vehicle leasing will not pay for the repair, as they will see this as negligence on your part.
- Another example of damage or negligence might be if you have "kerbed" your tyre causing both the wheel rim (or alloy wheel) to be damaged, as well as the tyre itself.
- Glass replacement is also not usually covered under a maintenance contract hire arrangement as this is usually covered under an insurance policy. A cracked glass windscreen, or a cracked headlamp lens is not routine servicing or mechanical repair.
In summary, with maintenance contract hire should cover and protect you from most mechanical repair and routine servicing eventualities, but not for any damage to the mechanics, that you have caused through your negligence. The higher your annual mileage, the higher the maintenance proportion of your contract hire rental will also be.
One final factor to consider is that all contract hire rentals are subject to VAT at the current rate. If you are VAT registered you can recover 100% of the VAT that is added to the maintenance proportion of the contract hire rental, making it very tax efficient.
The sample MINI lease, Hyundai leasing and Honda contract hire rentals below are shown on non-maintenance contract hire. However you can visit the main site to see both rentals with and without maintenance, to decide which is best for you.
From £115.47 ex. VAT
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