Contract Hire
Details
General Details
This provides a vehicle, with the monthly costs fixed
for a specific period with a pre-determined contract mileage.
Your choice of vehicle is purchased by a leasing company using
national fleet terms and then hired to you having agreed on
contract term annual mileages, maintenance options and monthly
rental. On termination of the contract, you simply return the vehicle
to us and assuming the contracted mileage has not been exceeded
and no accidental damage is evident, you have no further involvement
or liability.
Services Included in Contract Hire
1) Vehicle supply (all makes).
2 ) Road Fund License for the duration of the contract (at
current rate).
3 ) Maintenance and servicing inclusive contracts (recommended
but optional).
4 ) No end of contract disposal worries.
5 ) All routine maintenance and servicing, mechanical repairs,
batteries, exhausts and tyre replacement (can be included).
6 ) Replacement vehicle (if selected) provided in the event
of an accident or mechanical breakdown.
7 ) Full membership of a motoring programme including Home
Start, Road Side Assistance, Relay, Relay Plus and European
Cover.
Your Only Responsibilities
1) Choosing the vehicle.
2) Choosing the service options.
3) All fuel costs, mid service oil, comprehensive insurance
and any damage.
The Benefits
1) Monthly outgoing with no onerous
capital expenditure.
2) Fixed monthly rental for accurate budgeting and improved
cash flow.
3) Minimum initial expenditure, typically three months in
advance.
4) No capital tied up in a depreciating asset and no residual
value risks on your vehicles (depreciation being the largest
single cost).
5) Routine servicing and maintenance costs can be covered
within budget.
6) No purchasing or disposal hassles for new cars and VAT
qualifying used cars, assuming some personal use. The current
Legislation allows you to reclaim 50% of the VAT on your monthly
rental against your VAT liability. The other 50% can be offset
against taxable profits (rentals allowable against tax, subject
to IR rules).
7) Costs ‘off balance sheet’ improving accounting
gearing ratios and return on capital employed
The Disadvantages
1) Contract hire is a fixed contract, it is designed to run for a specific period of time and can therefore carry some penalty if terminated early.
