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What is Business Contract Hire?
Business Contract Hire is a lease scheme that allows you to drive a new van over an agreed period of time and within an agreed mileage.
To qualify for Business Contract Hire on your new van, you must be a sole trader, a partnership, a limited company or a public limited company.
WHAT ARE THE BENEFITS OF CONTRACT HIRE?
- Low monthly repayments
- Flexible terms from 24 to 60 months
- Option to extend the lease period at the end of the contract
- Return vehicle at end of contract and start a new agreement on a new vehicle
- No hassles with selling the car or losing money on the car’s value
- Better Cash Flow Management – Your business is only paying for the depreciation of the vehicle over the length of your lease contract. This frees up more cash for your business to spend on development and growth.
- In some cases, repayments can be claimed as a company expense
- VAT Benefits – 50% of your VAT on contract hire payments can be claimed back and 100% of VAT on a maintenance package can be reclaimed.
- The leasing company handles all administration.
- Leased cars are not counted as assets.
NEGATIVE POINTS OF A CONTRACT HIRE:
You will incur penalty charges if the vehicle is returned with excessive damage beyond the expected wear and tear.
Termination fees are payable if you chose to terminate the lease contract early.
There are charges for excessive mileage, so make sure you are accurate with your mileage prediction at the start of the term.
CAN I LEASE A VAN UNDER CONTRACT HIRE?
There are criteria which have to be met in order to qualify for a business lease contract:
- You must be a sole trader, partnership, Ltd or PLC
- You must be able to provide bank statements and/or audited accounts
- You need to produce proof of address and proof of ID for the main company director
- You should have a good credit rating (each application uses different criteria so we can’t advise on specifics with regards to credit ratings)
When your contract hire agreement ends there are two options available to you. These are:
- Return the vehicle to the finance company.
- Or, extend your term agreement with the finance company.
Note: There is no option to purchase the vehicle.