Contract Hire agreements are usually taken out by business customers as the payments are regular and VAT efficient. However, there are Personal Contract Hire solutions too. These options include a deposit which is usually 6 months of your monthly payment upfront followed by regular monthly payments over 12-60 months.
The difference between contract hire and hire purchase is that the contract is fixed and therefore you cannot come out of this early, you must pay the regular payments for the duration of the contract.
Benefits of this method are:
- Road Fund Licence (road tax) is included in your single monthly payment
- You can include maintenance packages within your monthly payment
- If you include a maintenance package, the only outgoings for the driver are insurance and fuel
- No residual value risk
- Low initial outlay
- Hire new or used vehicles
- You can reclaim VAT for up to 50% of your monthly payment and up to 100% on the maintenance element
- Claim Hire Rental Tax allowances
- Additional credit line
- Cash flow benefits