Contract hire or car/van leasing as it is also known is a long term rental agreement where a monthly premium is paid based on your mileage and the type of car or van that you wish to drive.  You can have either personal contract hire or contract hire for business and can get contract hire that includes cover for maintenance and breakdown.

What are the Benefits?

If you cannot afford to buy a car or do not want to put your business under financial strain by purchasing vehicles, then contract hire could be the answer. You can choose the car you want and decide on any optional extras like breakdown and repair for a fixed monthly amount. You choose how long you want the vehicle for and when you’re done, you could go and buy a car of your own or hire a new one again. You also have no need to worry about depreciation of your vehicle as once the contract is over, you can start a new contract with a new car.

If you need a car but don’t want to buy one, contract hire could be the best option for you.

The main points

  • It eliminates the financial risk associated with the disposing of your vehicles, because you simply hand them back at the end of the contract
  • It is an off Balance Sheet Funding method which frees up credit lines
  • Rentals can be offset against profits
  • You can reclaim 100% of the VAT on the maintenance package, and 50% of the VAT on the finance rental cost (100% on vans)
  • You will receive road tax for the duration of the contract
  • You have the option to include a maintenance package (servicing, replacement parts and tyres)
  • You have the option to include breakdown cover and replacement vehicles

What happens at the end of the contract?

You simply hand the vehicle back at the end of the contract - You have no option to purchase the vehicle.

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of this site have already been set. To find out more about the cookies we use and how to delete them, see our privacy policy.

  I accept cookies from this site.
EU Cookie Directive Module Information