Contract Hire

Details General Details
This provides a vehicle, with the monthly costs fixed for a specific period with a pre-determined contract mileage.

Your choice of vehicle is purchased by a leasing company using national fleet terms and then hired to you having agreed on contract term annual mileages, maintenance options and monthly rental. On termination of the contract, you simply return the vehicle to us and assuming the contracted mileage has not been exceeded and no accidental damage is evident, you have no further involvement or liability.

Services Included in Contract Hire

1) Vehicle supply (all makes).
2 ) Road Fund License for the duration of the contract (at current rate).
3 ) Maintenance and servicing inclusive contracts (recommended but optional).
4 ) No end of contract disposal worries.
5 ) All routine maintenance and servicing, mechanical repairs, batteries, exhausts and tyre replacement (can be included).
6 ) Replacement vehicle (if selected) provided in the event of an accident or mechanical breakdown.
7 ) Full membership of a motoring programme including Home Start, Road Side Assistance, Relay, Relay Plus and European Cover.

Your Only Responsibilities

1) Choosing the vehicle.
2) Choosing the service options.
3) All fuel costs, mid service oil, comprehensive insurance and any damage.

The Benefits

1) Monthly outgoing with no onerous capital expenditure.
2) Fixed monthly rental for accurate budgeting and improved cash flow.
3) Minimum initial expenditure, typically three months in advance.
4) No capital tied up in a depreciating asset and no residual value risks on your vehicles (depreciation being the largest single cost).
5) Routine servicing and maintenance costs can be covered within budget.
6) No purchasing or disposal hassles for new cars and VAT qualifying used cars, assuming some personal use. The current Legislation allows you to reclaim 50% of the VAT on your monthly rental against your VAT liability. The other 50% can be offset against taxable profits (rentals allowable against tax, subject to IR rules).
7) Costs ‘off balance sheet’ improving accounting gearing ratios and return on capital employed

The Disadvantages

1) Contract hire is a fixed contract, it is designed to run for a specific period of time and can therefore carry some penalty if terminated early.