Contract Hire
Contract Hire is available to Sole Traders, Partnerships and Ltd Companies and is the methods of the majority of companies use to finance vehicles. It is hassle free, with a fixed budgeted motoring plan.
The initial payment, term, mileage and maintenance package (if required) can all be tailored to suit your needs.
An initial payment is made (usually equivalent to 3 monthly payments) followed by a monthly payment up to the agreed term. At the end of the contract the vehicle is simply collected from your designated UK mainland address.
Not all companies have to be Vat registered to contemplate this type of agreement.
However it is advisable due to the fact that you can claim 50% of the Vat element on the monthly finance payment and 100% of the Vat element on the monthly maintenance payment (if applicable).
If you like the vehicle and want to keep it under this type of financial agreement you cannot buy the vehicle. It has to be bought by a third party (I.e. yourself, your partner, an employee, a family member) not associated with the name on the financial agreement.
Key Points to Remember:-
- 1. Contract Hire is not shown as an asset on the balance sheet and therefore you do not need to depreciate the vehicle, removing the element of financial risk.
- 2. Road Fund Licence is included for the duration of the contract agreement.
- 3. The contract is agreed from the start to suit your requirements therefore making budget planning easier. If taking the maintenance option you don’t have to worry about the cost when you car needs servicing, etc.
- 4. High early termination cost (dependant on how many monthly payments are left).
- 5. An inspection is conducted on collection, if your have exceed your mileage or there is any damage (under BVRLA fair wear and tear conditions) you will have to pay for it.