Contract Hire

Contract Hire is a hiring agreement normally over a period of 12 to 48 months, where the vehicle remains the property of the finance compamy. At the end of the agreed term the vehicle is returned to the finance company for disposal. The contract has a set mileage restriction which can be tailored to your needs however rarely exceeds a total mileage of 120,000 miles. Payments are fixed for the term of the contract, however contracts can often ask for three rentals before the contract starts. Where a vehicle has partly private use 50% of theVAT on the maintainence element of the contact can be claimed back at 100% and 50% of the VAT on the rental element can be claimed.

Personal Contract Hire

Some companies are now looking at Employee Car Ownership (ECO) schemes as available alternative to regular funding methods. These schemes provide a mechanism for the driver to take personal ownership of their vehicle yet benefit from group buying power and tax efficiencies.

The car is financed through a Credit Sale Agreement between the driver and leasing company. The employer pays the driver a monthly allowance which relates to the employee level and their choice of car. Taking this allowance together with the personal tax savings, as well as utilising Inland Revenue approved business mileage allowances, provides the driver with a net monthly budget.

The driver has greater choice as they can trade up or down from their current company car level and pay more or less per month as appropriate. The employer can benefit from a reduction in the gross cost of providing drivers with a vehicle. However this is strongly influenced by the make up of the fleet and in particular the number of business miles conducted by a driver. Generally speaking, drivers need to be in the 10,000+ business miles bracket for this to be an effective choice.

Finance Leasing

Lease purchase is a method of financing a vehicle, normally for vat registered businesses or companies. The monthly rental is determined by the cost of the vehicle, the period and the estimated future value of the vehicle which is based on the proposed annual mileage.A payment equivalent to the estimated future value is payable at the end of the contract, when the vehicle becomes the property of the lessee. Maintenance packages are often available, if required.

Lease Purchase is a cheaper monthly alternative to Hire Purchase, the traditional method of financing, and is written on a hire purchase agreement with the protections afforded by the consumer credit act.