What Is Contract Hire?

Contract Hire is a form of leasing. It’s a long-term agreement giving you use of a vehicle for a fixed period of time, usually between 2 and 5 years and for a predetermined mileage at a fixed price, which is called a rental.

What Is Contract Hire?

The rental is calculated based on a number of variable factors.

  • The vehicle you choose, make/model/derivative.
  • How much the finance company has to pay to purchase the vehicle (utilising both ours and the contract hire company’s enormous buying power).
  • How long the agreement is for, normally contracts are between 24 - 60 months. 
  • The total mileage the vehicle will do for the period you have it. 
  • The anticipated value of the vehicle at the end of the contract (which is commonly called the residual value) 

In basic terms, the rental you pay is the cost of ownership to the finance company which is then split over the term of the agreement. You will pay an agreed amount as an initial rental on delivery of the vehicle followed by subsequent monthly rentals.  The higher your initial rental the lower the monthly rentals will be and conversely, the lower your initial rental, the higher your monthly rentals will be. Rentals are subject to VAT. PCH quotations include VAT and business quotations will be net of VAT.

You must ensure that the vehicle remains road legal and is maintained in accordance with the manufacturer’s recommendations. You are required to comprehensively insure the vehicle, must not part company with it and if you wish to take it abroad this may be for a period of not more than 28 days and requires authorisation from the finance company. 

At the end of the agreement, the vehicle must be returned to the finance company. You may incur additional charges at the end of the agreement. Examples of this include if the vehicle is returned with higher mileage than the agreed, if the vehicle is unroadworthy or not in a satisfactory condition for example damage to the bodywork, wheels or interior, dents and if it has incomplete service history.

Why Should I Contract Hire?

Contract Hire has become increasingly popular for both private individuals and businesses who have no desire to own a vehicle. For businesses, it may also be VAT and tax-efficient.

Get a really good deal

We have relationships with the UK’s top funders. Between us, we buy thousands of vehicles every year allowing us to negotiate and secure fantastic discounts, which are far greater than those offered to general consumers. Plus being independent, we’re free to shop around for the best deal resulting in our ability to offer highly competitive deals.

Drive the vehicle that you want

Why would you want to incur a substantial outlay to own something which simply depreciates in value? Contract Hire offers you the ability to drive the vehicle of your choice with a low initial outlay and by also including a maintenance package will allow you to have fixed cost motoring. For information about maintenance packages see ‘Maintenance – what are the benefits’.

A new vehicle every few years

Having the ability to change your vehicle every few years enables you to take advantage of the latest models, new technology and improved running costs.



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