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Contract Hire

Contract Hire is one of the most popular ways to finance your vehicle, here we look at the benefits and points to consider. 

What is contract hire?

Contract Hire is available to businesses and consumers, commonly referred to as BCH (Business Contract Hire) & PCH (Personal Contract Hire) and is effectively a long-term rental agreement.

Suitable for users that do not want to own the vehicle at the end of the contract. Also popular with VAT registered companies as they can claim back 50% of the VAT on car payments and 100% on commercial vehicle payments. 

How does it work?

With Contract Hire you pay a fixed monthly payment for the agreed term of the chosen contract, typically between 24 - 60 months.

At the end of the contract you return the vehicle to the funder and avoid any risk on the depreciation or the hassle of having to dispose of it. 

The rental is calculated based on a number of factors, below are what you need to decide on in order for a rental to be calculated. 

  • Vehicle you are interested in and any cost options. 
  • Contract length you are comfortable with (24 - 60 months).
  • Annual Mileage.
  • Initial payment you have available.
  • If you want to include a maintenance package. 

Key benefits.

  • The funder owns the vehicle, therefore it sits "off the balance sheet".
  • Ability to claim back VAT on the finance and maintenance elements for VAT registered companies. 
  • Fixed monthly costs, great for budgeting. 
  • Includes RFL for full term of the contract.
  • Ability to access a new vehicle every few years.
  • Option to include a full maintenance package for the full term of the contract.  

Points to consider.

  • Not suitable for people that want to own the vehicle at the end.
  • Not suitable if your vehicle is likely to be damaged, more of an issue with the use of commercial vehicles.
  • Not suitable if you want to change your vehicle more frequently, once in an agreement it can be costly to terminate. 

At the end of the contract you have a number of options, please see our end of contract guide. 

If any of our guides haven't answered your questions please contact the team who will be happy to help Contact Us.