Contract Hire

Contract hire is a Hiring Agreement where the vehicle remains the property of the Finance Company
The vehicle is disposed of by the Finance Company at the end of the contract hire period.
The contract hire period is usually set between 2 & 4 years.
The contract is for a set mileage usually for a maximum mileage of 100, 000 petrol engines & 120,000 diesel engines.
The customer pays a fixed monthly rental for contract hire which will always include:

a) Cost of vehicle funding.
b) Cost of vehicle depreciation.
c) Road Fund License.

For an additional Rental the customer can include the following options to a contract hire package:-

a) All Maintainance, Service, Repairs, Tyres and Batteries.*
b) Relief Vehicle provision.
c) Recovery service.
d) Motor Club Membership.

[ *Accidental damage, driver abuse and glass breakage's are normally excluded. ]

Advantages of Contract Hire

1. Fixed cost motoring:-
The Customer only has to bear the direct costs for fuel and vehicle insurance, plus Excess Mileage charges if the
vehicle exceeds the Terminal Mileage figure

2. Reduced Administration.
3. No responsibility for vehicle disposal on contract hire.
4. Low initial outlay.
5. Low monthly outlay.
6. Finance charged on VAT exclusive price of new and
qualifying cars.

Disadvantages of Contract Hire

1. No equity on the vehicle at the end of the contract hire.
2. VAT on rentals only 50% of which is reclaimable.
3. Vehicles do not appear on the balance sheet.