Contract Hire

A Contract Hire agreement requires that you pay a fixed rental each month over an agreed period (typically 12-48 months) and that you don’t exceed an agreed total mileage for the duration of the contract (typically 10,000-150,000 miles). The total mileage can usually be re-scheduled during the course of the contact if it looks like you might exceed the contracted amount. Rather than facing a large initial outlay and having capital tied up in a depreciating asset, you simply pay an agreed monthly rental that clearly helps cash flow.

Contact hire agreements are tailored to individual needs with the customer specifying annual mileage, contract length and whether to have maintenance or not. Any new car or commercial vehicle available in the UK can be contract hired with the customer choosing the exact specification. Contract hire is available to both business and private users.

You need to insure the car yourself, fully comprehensive. The car can be used for any purpose, or driven by anyone you choose. In effect, it is your own brand new car for the length of the hire period. You can even take it abroad.

At the end of the contract the car is simply collected from you and you have no further obligations. You do not buy the car, nor do you have a final “balloon” payment.

Because the risk of ownership is not with you the customer, you have the benefit of the rental payments being non-capitalised which means the vehicle and it’s funding will remain off your balance sheet. This is an alternative source of borrowing which permits existing lines of credit to be utilised in more profitable ways.

Further advantages of contract hire are the elimination of all risk of losses on resale value in the volatile used car market i.e. depreciation. If a full maintenance contract is entered into, the risk of unexpected maintenance costs is also avoided. This has the added advantage of relieving you of the administrative burden of vehicle maintenance authorisation, payment and control. You also benefit from the economies of scale achieved by contract hire companies. Road tax is also included for the duration of the contract.

With contract hire, you benefit from a variety of cost savings, without becoming involved with time consuming administration and paperwork associated with company cars, enabling you to devote more time and resource to your core business activity.

Some points to be considered about contract hire:
	Available to business and private users.
	Low monthly payments.
	No large deposit or final payment.
	No depreciation risk.
	A brand new vehicle of your choice and specification.
	Vat and tax efficient.
	Contracts tailored to your needs.
	Servicing can be included.
	Road tax is included.
	Any car or commercial vehicle available.
	Single vehicle or complete fleet.
	Fixed costs.
	No admin required.
	Off balance sheet funding.
	Benefit from economies of scale.