Contract Hire Vehicle Finance Solutions

Posted on November 21, 2010 by

Contract Hire is a great alternative for business vehicle financing. Leasing cars and vans is a way for business’s to acquire vehicles without a large initial cost or risk from depreciation. This type of lease known as contract hire allows the release of tied up funds for more beneficial use inside the company creating the optimum cash flow.

Statistics show that approximately 62% of all fleet registered vehicles are financed through vehicle leasing, which is increasing daily as more organizations become conscious of the financial benefits and advantages of this hire option.

Contract hire basically is the cost of the calculated depreciation on a vehicle over a set period of time usually between 24 to 48 months over a prearranged mileage plus a fixed interest charge for the lease of that car or van assuming the company user does not exceed the constraints of the agreement i.e. excess mileage or damage to the automobile above what is classified as fair wear and tear. Maintenance can be added to the contract hire agreement together with accident management. These servicing extras are often used to provide a more complete package which some companies prefer as it helps them reduce admin time for other business activities.

Car financing and price forecasting can be kept simple using contract hire with fixed monthly payments.

Car leases and vehicle contract hire solutions include, contract hire, contract purchase, finance lease for firms whilst providing personal  contract hire and personal contract purchase for the private sector. What makes contract hire attractive for businesses is that the leasing companies can claim back all the VAT on a qualifying vehicle, therefore reducing the capital cost of the vehicle, which means the customer benefits from leasing the vehicle a much lower price than the retail cost.

VAT registered businesses can also claim back up to 50% of the VAT charged on the finance of the car and up to 100% the VAT on the maintenance.

In the case of vans and commercial vehicles used only for business purposes the hirer may claim up to 100% of the VAT on both the finance and the maintenance. At the end of the agreement the car or van is returned to the finance provider. The vehicle is usually collected by the finance company.

Sometimes a business needs a lease extension, say while awaiting the factory order of their replacement vehicle; this can often be organized easing the transition between cars or vans with the minimum amount of fuss.

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