Is Contract Hire the right choice for you? In simple terms, Contract Hire which is sometimes known as an Operating Lease is a method of paying for the use of a vehicle for a contracted fixed period. Although there is no option to own the vehicle at the end of the bad credit car leasing period.
Bad Credit Contract Hire allows a customer sometimes known as the lessee to choose the vehicle they require, have the use of it for a set period and a previously agreed anticipated mileage and then return it to the leasing company (known as the lessor) at the end of the period of hire. The risks and benefits are therefore with the customer under Contract Hire agreements.
As the customer is renting the vehicle from the leasing company for a fixed period and pays a fixed monthly rental for the use of it. The customer is not responsible for the disposal or sale price of the vehicle at the end of the agreement which makes it a very easy and risk-free way to run a vehicle, however if the agreed mileage is exceeded or the vehicle is not maintained to a good condition high cost charges will be imposed. Both scenarios are explained and clearly marked in any bad credit car leasing agreement.
Bad credit Contract Hire is available to any type of customer whether they own a business or are private individual but, because of the agreement structure and form, it is ideally suited to VAT-registered businesses because the rentals attract VAT and this sum can be claimed back from Her Majesty’s Revenue and Customs (HMRC).