WHO IS CONTRACT HIRE DESIGNED FOR?
Contract Hire is designed for companies who wish to hire a vehicle for a period of time and hand it back at the end.

HOW DOES CONTRACT HIRE AFFECT MY COMPANY ACCOUNTS?
Budgets are very important when you are a company, so a product that allows you to pay a low deposit, pay regular monthly payments and hand the vehicle back without any problems associated with selling a car or van. Buying a car is treated as on balance sheet and contract hire is treated as off balance sheet. If your company wishes to write off profits then buying a car maybe the way forward, but if your company needs to borrow money then contract hire can be better. It is important to discuss your individual company’s financial position so that a fleet policy can be established. Should a company purchase ten cars at £15,000 each then that is a £150,000 outlay. With contract hire the company pays a low deposit at the start of the contract so it can be advantageous to lease if cash flow is an issue.

WHAT PERIOD CAN I USE THE VEHICLE FOR?
Contract hire is all about allocating your period at the start of the contract. The usual period is either; two years, three or four years.

DOES IT MATTER HOW MANY MILES I DO IN THE VEHICLE DURING THE CONTRACT?
At the start of the contract you allocate your chosen mileage for the contract duration. If you exceed the allocated mileage you will pay an excess mileage charge which is clearly set out at the start of the contract.

DO I PAY A DEPOSIT?
It is not a deposit but an initial rental? If it was a purchase agreement it would be a deposit. The initial rental is usually the equivalent of three payments.
Contract Hire is designed for companies who wish to hire a vehicle for a period of time and hand it back at the end.

CAN I OWN THE VEHICLE AT THE END OF THE CONTRACT?
No, contract hire is a leasing agreement with Vat benefits to the user. If you do buy the vehicle then it is possible for the Inland Revenue to reclaim back all of the Vat benefits that you have received during the course of the contract. It is a lease agreement not a purchase agreement. If owning a vehicle is your aim then contract hire is not for you.

OWNING CARS & SELLING CARS
A couple of questions that you could ask yourself if you are deciding between leasing a car and buying a car are; can I predict the value of a vehicle that I buy in two, three or four years time? Am I a car salesperson, can I deal with potential buyers who maybe time wasters or could I navigate the alternative by auctioning the vehicle? Vehicle disposal can be easy or it can be filled with pit-falls. If a company is running a fleet of vehicles then this process is multiplied so it is important make sure that you have the time.