Business contract hire is a long-term vehicle rental agreement suitable for limited companies,sole, traders & partnerships.
It’s a particularly popular option for VAT registered companies, as Companies can claim back 50% of the VAT for the supply of the vehicle.
Would it work for your business?
If your company leases a vehicle on a contract hire basis, you will pay to rent the vehicle in monthly instalments for a contract of 24, 36, 48 or 60 months. Once the contract is finished, the vehicle is returned to the leasing provider, leaving them to deal with the disposal of the car or van.
Will my company be eligible?
Business contract hire is available to financially eligible limited companies, limited liability partnerships, sole traders and partnerships.
The key features of Business Contract Hire
- Lending provider remains the owner of the vehicle, meaning the vehicle appears ‘off the balance sheet’ of your company.
- Fixed monthly rentals cover the rental of the vehicle, plus any maintenance options if you choose this option.
The monthly rentals are calculated by taking the following into consideration:
- The cost of the vehicle.
- The contract period.
- Anticipated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the contract).
- Mileage allowance (as chosen by you before the start of your contract).
- Any additional options, such as a maintenance contract.
- Vehicle tax is provided for the full term of the contract.
The key benefits of Contract Hire for your Business
- Low initial rental.
- Fixed rentals for the whole package, making budgeting easier.
- Flexible terms to meet your company’s requirements, with variable contract duration and mileage terms.
- Contract hire removes depreciating assets from your company’s balance sheet, and the associated risks of owning vehicles, such as disposing of the vehicle.
- You can spread the cost of maintenance of the vehicle and included this in the monthly fees.
- Flexible invoice arrangements help to considerably reduce administration.
- If yours is a VAT registered company, you can claim back 50% of the VAT on the finance element.
Things to consider when thinking about Business Contract Hire
- Early termination can be expensive.
- An excess mileage charge will be payable if you exceed your agreed mileage, this is worked out on a 'pence per mile' basis as set at the start of your contract.
- You must return the vehicle in a well maintained condition. Any damage over and above that stated in the Fair Wear and Tear Guide will be subject to additional charges.
- Vehicle must be insured fully comprehensive.
- You don't own the vehicle as there is no option to buy it.
The small print *
All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future. All prices correct at time of publication.
Vehicles are inspected before collection and end-of lease charges occur when the vehicle, its equipment or accessories are not used, maintained or looked after as originally agreed at the start of the lease. The charges compensate the leasing company for the cost of rectifying damage or missing items such as keys or service history.
You are not charged at end of lease for any refurbishment that arises from normal wear and tear.
You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.