Business Contract Hire Explained

Car or Van Contract Hire (car leasing ) is simply a method of long term rental, linked to a mileage allowance, which can provide you a fixed monthly payment for the vehicle you want.

You can choose how long you want to keep the car for, and simply send it back at the end of the contract and order a new vehicle. It is a really simple way to budget and fix your motoring costs, as all you do is insure and put fuel in your vehicle.

Things you need to know

• Always ask if there is a document fee involved as if you divide this fee by the number of months in your contract, the "actual monthly" rental is higher than you think. 
• VAT registered companies can only recover 50% of the VAT on the finance rental (100% on the service element of the rental).
• Business Contract Hire is a fixed contract to term and mileage. Go over the contractual mileage and you will pay an excess mileage fee charged at a pence per mile rate.
• There will be a termination charge, if you return the vehicle early to the contract hire company and this will vary between different companies.

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