Contract Hire & Leasing

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Contract Hire

Contract hire is a car leasing finance option, available to sole traders, partnerships and limited companies.Contract hire is very popular with VAT registered companies because they are able to claim back 50% of the VAT on cars and 100% on vans.The reason why this is so popular with businesses is because it allows the company to focus on their operations without having to think about the financial risk of owning vehicles.Contract Hire represents an agreement between two parties to lease a vehicle (car or van) for a set time period (and mileage) at a fixed monthly cost.The monthly rental amount is based upon the original cost of the vehicle, the mileage that is to be covered and the length of the contract – typically two, three or four years. An allowance for depreciation is also factored in to the final Contract Hire monthly cost.Maintenance packages can often be included within a Contract Hire agreement but these are optional, not compulsory. Such maintenance packages would typically provide cover for all car or van servicing within the period of the contract. 

How Does It Work

 The company hires a vehicle from a leasing company for an agreed duration and makes regular monthly rental payments. But the leasing company owns vehicle and is responsible for the associated risks. Once the contract has finished, the vehicle is returned to the leasing company.Here is an example:Example.com agrees a 48 month contract hire deal on a Peugeot Partner van with an annual mileage of 10,000. After the upfront payment of £920.28 + VAT, Example.com will then pay a monthly fee of £153.38 + VAT for the following 48 months. As Example.com is VAT registered, they will be able to claim back the VAT on the monthly payments. Once the contract has expired, the Partner van is returned to us and Example.com are free to lease another vehicle.There are several advantages to contract hire agreements:

  • Fixed, low monthly rental payments.
  • Flexible contract durations and mileage rates.
  • Optional maintenance packages.
  • No depreciation risks.
  • Flexible invoice plans.
  • No large initial outlay.

Contract Hire is a very good option for VAT registered companies who do not wish to show their vehicles as an asset on their balance sheet. Plus you no longer have to worry about the residual value of the vehicle as this is all factored into the monthly rate.You also have the freedom to change your vehicles on a regular basis; once the lease period has finished, you can choose another brand-new car.If you would like a Contract Hire quote, please contact us on 01834 814042 and a member of staff will be on hand to assist you. 

Leasing

A lease is basically a long-term vehicle rental agreement, which offers exclusive use of a car for an agreed length of time (and mileage) at a fixed monthly rate. Car leasing is a cost-effective way of driving a brand new car without the hefty expenditure associated with purchasing.The biggest cost of any new vehicle is depreciation. As the old saying goes, new cars start to decline in value the minute you drive them off the forecourt. And most will lose over half their value after the first three years of ownership. But with leasing, an allowance for depreciation is calculated into the monthly cost.Of course the disadvantage of car leasing is that you don’t actually own the vehicle at the end of the lease period. However, once the lease period has lapsed, you do have the option to lease a brand-new car once again 

Advantages Of Leasing Over Purchasing

There are several advantages to leasing a new car rarther than buying one:

  • Fixed, low monthly rental rate.
  • Low initial payment.
  • No depreciation risks or disposal costs.
  • Negotiable contract duration and mileage allowance.
  • Optional maintenance packages.
  • Road tax included.

Contact Us For A Quote Today

Whatever your vehicle requirements please contact a member of staff on 01834 814042 for a no obligation quote today