Car Contract Hire Explained

How to use Contract Hire with or without maintenance as a finance option to get into your next car

To Apply for a Car Contract Hire Quote, click here

1. Contract Hire with Maintenance

This is a simple Operating Lease that includes full maintenance, servicing and road fund licence. It provides a complete fixed cost motoring package, leaving you free to concentrate on running your business.

Cashflow Benefits

With a low initial outlay, normally expressed as monthly rentals in advance, followed by fixed monthly payments, you know exactly what your monthly motoring costs will be. Contract Hire may also be classified as "off balance sheet" which may improve the financial ratios in your accounts (gearing).

Tax Implications

As it is an Operating Lease your finance rentals can be offset against taxable profits. If you are VAT registered, you can reclaim 50% of the VAT on the finance element of the rentals if the vehicle is used privately, or 100% if it is used exclusively for business or is a commercial vehicle. What's more, all the VAT on the maintenance element of the rental can be recovered, irrespective of vehicle use.

Who Owns the Vehicle at the End of the Agreement?

At the end of the agreement you may arrange a brand new vehicle to replace your current vehicle, handing the old one back to us. We will arrange for vehicle disposal.

2. Contact Hire Without Maintenance

This is an Operating Lease without maintenance or servicing. It is a simple and straightforward facility that can offer some businesses an efficient package that lets you retain control of your own vehicle servicing and maintenance.

Cashflow Benefits

A vehicle on an Operating Lease can be classified as "off balance sheet" for accounting purposes, therefore offering advantages to your business by improving its financial ratios (gearing).

Tax Implications

As it is an Operating Lease your finance rentals can be offset against taxable profits. If you are VAT registered, you can reclaim 50% of the VAT on the finance element of the rentals if the vehicle is used privately, or 100% if it is used exclusively for business or is a commercial vehicle.

Who Owns the Vehicle at the End of the Agreement?

After you have paid your regular fixed monthly rentals for the fixed period, at the end of the agreement you simply hand the vehicle back.

To Apply for a Car Quote Using Contract Hire, click here