Vehicle Contract Hire
- Contract hire is a Hiring Agreement where the vehicle
remains the property of the Finance Company
- The vehicle is disposed of by the Finance Company at
the end of the contract hire period.
- The contract hire period is usually set between 2 &
4 years.
- The contract is for a set mileage usually for a maximum
mileage of 100, 000 petrol engines & 120,000 diesel
engines.
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The customer pays a fixed monthly rental for contract
hire which will always include:
a) Cost of vehicle funding.
b) Cost of vehicle depreciation.
c) Road Fund License.
For an additional Rental the customer can include the following
options to a contract hire package:-
a) All Maintainance, Service, Repairs, Tyres and Batteries.*
b) Relief Vehicle provision.
c) Recovery service.
d) Motor Club Membership.
[ *Accidental damage, driver abuse and glass breakage's are
normally excluded. ]
Advantages of Contract Hire
 1. Fixed cost
motoring:-
The
Customer only has to bear the direct costs for fuel
and
vehicle insurance, plus Excess Mileage charges if the
vehicle
exceeds the Terminal Mileage figure.
2. Reduced
Administration.
3. No responsibility
for vehicle disposal on contract hire.
4. Low initial
outlay.
5. Low monthly
outlay.
6. Finance
charged on VAT exclusive price of new and
qualifying
cars.
Disadvantages of Contract Hire
1. No equity
on the vehicle at the end of the contract hire.
2. VAT on rentals
only 50% of which is reclaimable.
3. Vehicles
do not appear on the balance sheet. |
