Contract Hire

Contract Hire Explained

Contract Hire is for business and or personal users who want the ability to change their car or van when the contract hire deal expires, these can be between 18 and 60 months.

It is an agreement between the business or personal user and the leasing or contract hire finance company, all leasing and contract hire agreements are subject to a credit search.

There are lots of finance options to choose from with contract hire being the most popular.

One of the main reasons contract hire is so desirable is that you can change your car or van for a new one without the large outlay of a big deposit. Most ‘deposits’ or ‘initial payments’ can be as little as 1 month’s payment.

The Way Contract Hire Works

You state your expected annual mileage at the onset, the contract hire company then work out the expected ‘residual’ value of the car or van at the end of the agreement, (basically what they think they can sell the car or van for with the age and mileage at the end of the contract) this ‘selling price’ is then deducted from ‘purchase price’ this difference, along with their profit/admin charges is added together, then divided by the amount of months the contract hire agreement is to run and hey, presto, your monthly contract hire payments have been calculated.

At the end of the contract hire period you don’t have the worry about selling the car or van you simply hand it back to the contract hire company.

Should you wish to end the agreement early you would normally pay up to 50% of outstanding rentals and hand the car or van back, Make sure you check the T&C’s of the contract, because you can sometimes ‘swap’ these contracts to someone else – assuming the contract hire company agrees!

The Advantages Of Contact Hire

  • Flexible deposits
  • Contracts that can run 18 months to 60 months
  • Bolt on Maintenance & Service packages – these include all servicing (in accordance with manufactures guidelines),tyres, batteries, exhausts and basically anything that is not covered under the warranty.
  • Annual Mileage limitations starting from just 5000 miles per year and increasing by 1000 mile increments upto 40000 per year
  • Ability to claim a % of the VAT back, assuming your VAT registered (100% if total business use, 50% if any personal Mileage covered), make sure you check with your VAT adviser.

You can see why contract hire is such an appealing method of funding and changing your car or van on a regular basis.

Compare contract hire and leasing quotes at Compare Contract Hire Offers