Contract Hire is a way of funding the use of a vehicle for a set period of time. This is known as ‘renting’ the vehicle. This is sometimes called the primary period of hire. At no point during this agreement will the customer have any rights to the vehicle nor own the title to the vehicle.
Contract hire is open to private individuals or businesses. As the payments attract VAT, this type of agreement ideally suited VAT registered businesses. This agreement allows the customer to choose a vehicle and use it for a set period of time. The customer agrees an anticipated mileage, and time period. Once the leasing period is finished, the customer hands the vehicle back to the leasing company.
The only cost to the customer is the agreed fixed monthly payment for the use of the vehicle. The customer is not responsible for the sale price of the vehicle at any point of the agreement or at the end of the contract.
The customer will not be required to pay any settlement fee at the end of the contract, however charges may apply should the vehicle not be in the agreed condition. The customer must ensure that the vehicle has been kept in a ‘good condition’; any damage, which is beyond ‘reasonable wear and tear’, is the responsibility of the customer. The customer should ensure that the vehicle has not exceeded the anticipated mileage, if it has exceeded this number, the customer will be charged at a pence per mile rate plus VAT.
We hope that this has helped clarify the options available. Should you have more queries or questions, do not hesitate to contact our customer service team, who will promptly respond to any of your queries.