Business Contract Hire for Cars

How Does Business Contract Hire Work?

Business Contract Hire (BCH) is the most popular type of vehicle leasing for any business. It’s an easy and cost-effective way for you to drive the vehicle you want for your business, but may not be able to afford to buy outright. Whether you're a tradesperson looking for the best van on the market, or a fleet operator looking to find an efficient finance product to fill your fleet with the most up-to-date vehicles, BCH could be the best option for you.

BCH allows you to hire a car for a set period of time (usually between 2 and 5 years) and during that time, you pay to drive it with fixed monthly rentals. The monthly rental cost is all based on the value of the car, how long you want to keep it for and how many miles you think you’ll do over the period of your contract. You can also opt to include a maintenance package. At the end of the contract, you simply hand the car back!

Find out more about the factors affecting the price of your car lease.

Benefits:


Low initial rental, typically equivalent to 3 monthly rentals. Choice of contract period from 24 to 60 months. Hassle free - option to add servicing & maintenance, taking away all the hassle of running a vehicle. It’s fixed cost motoring so you always know where you stand. You can plan your monthly cash flow. Free up capital - get a new vehicle without the upfront costs. This frees up money for you to invest elsewhere in your business. There’s no risk. The risks on vehicle depreciation & maintenance is eliminated. At the end of the contract, the vehicle is simply handed back without worrying about how much it might be worth. There’s less admin. The finance company deals with all the buying, maintenance & selling issues. There are tax benefits. You can usually reclaim at least 50% of the VAT on the lease rental and 100% if the vehicle is solely for business use, as well as 100% on the maintenance charges. The rentals may be allowable against corporation tax. The Road Fund Licence is provided for the full term of the contract. The vehicle usually appears on the 'Balance Sheet' as it is a long term lease asset.

Points To Note:


You will need to estimate the term & mileage for the use of the car. The cost to terminate the contract early can be expensive. If you go over the agreed mileage allowance, excess mileage will be charged for each mile over that is stated in the contract. You must look after the car & return in a well-maintained condition, if not you will be charged for any damage over & above as stated in the 'Fair Wear & Tear Guide'.

Why Choose Contract Hire?

This would suit you if you:

  • Want a brand-new car but don’t want to pay for it outright.
  • Know exactly how long you want to keep the car & a good idea of the mileage you'll be doing.
  • Want to avoid the risk of depreciation & maintenance costs.
  • Want fixed-cost and stress-free motoring.
  • Are not worried about owning a car.

Car Business Contract Hire FAQs

  • Apart from the advantage of being able to get a brand new car, often more cheaply than a used car would cost on Hire Purchase (HP), Contract Hire will benefit anyone who is seeking to eliminate the financial risk associated with disposing of the car. You can let the funder worry about depreciation & negative equity & just enjoy the convenience of a full maintenance service, which will include routine maintenance, servicing, routine tyres, etc, at a fixed monthly cost.You will enjoy a low initial rental, typically equivalent to 3 months' rentals. What's more, you can even offset your monthly rentals against taxable profits and, if you're VAT registered, up to 100% of this can be claimed back too.

  • With this type of contract, you simply hand back the car at the end of the contract, leaving you free to contract hire a brand new car. There is not an option to take ownership.

  • No. Certain funders do stipulate that you must be VAT registered, but we have access to a number of funders who don’t require this. If you do become VAT registered during the course of the contract, you will be able to start claiming the VAT back.

  • If you're VAT registered, you can claim back up to 100% of the VAT from your monthly rentals if the vehicle is solely for business use.

  • There are limits, but you determine these at the beginning of your contract, so it's important that you give us a realistic estimate of what your annual mileage is likely to be. But don't worry, if your circumstances change you can amend the terms of your contract to reflect a higher mileage, after the first 12 months, in order to spread the cost. If you go over their agreed mileage allowance, excess mileage will be charged for each mile over that is stated in the contract.

  • Yes. After the first 12 months, you will be able to request a contract amendment so that changes in your circumstances can be reflected in your monthly rental, rather than waiting for a bill at the end of the contract.

  • Although most funders will have upper limits on contract length & mileage, it is possible to amend your contract during the term, as long as you stay within these limits and usually we can work with our funding partners to explore and offer you extension offers or alternatively provide you with a variety of upgrade options..

  • Under the Consumer Credit Act, you have to be at least 18 to apply for credit. However, some funders insist on 21 as a minimum age, due to the need to see some credit history.

  • Contract Hire allows for low initial rentals. These are typically equivalent to 3 rentals in advance but, depending on circumstances, could be as low as 1 rental in advance.

  • Your car contract hire, when taken through us, enables you to benefit from both dealer discount and the substantial manufacturer support we negotiate directly with the manufacturers on your behalf. With this combined support, the total repayments will be significantly more competitive than purchasing outright where you are more than likely receiving the dealer discount alone.

  • The emissions your car puts out affect the amount of VED tax (commonly referred to as Road Tax) you will pay as part of your monthly leasing rentals.

  • Yes. All Contract Hire Funders will conduct a credit check. However, as all Funders have slightly different underwriting criteria, we will do our best to find the right Funder for you & your circumstances.

    Our Eligility Checker will check your likelihood of being accepted for credit on a new car lease without affecting your credit score.

  • This can vary depending on the Funder. It can take as little as an hour to get a decision, but we can usually get an answer for you within 24 hours. We will sometimes get requests for further information and, in these cases, it can take slightly longer to get the final decision.

  • Most credit checks will leave a 'footprint' but in most cases, only repeated checks will have a negative effect.

  • It really depends on what kind of bad credit history you have. Different Funders have different criteria & some can be more pragmatic than others. There are no guarantees, but we will always try to match you with the most appropriate Funder.

  • Yes. We have access to all the top car finance companies in the country & the amount of business we do with them means that you can enjoy their very best rates.

  • All our customers must be assessed for credit before they are accepted by the finance company (Funder). Although different Funders will have differing underwriting criteria, some typical examples of the information needed would be:

    • Name
    • Date of birth
    • Company name
    • Company registration number (for limited companies)
    • Address history for the last 5 years
    • Number of years trading/ownership
    • Directors details (for limited companies)
    • Bank details
    • Email address
  • No. The car remains the property of the Funder throughout the contract. This means that they also carry the residual risk (depreciation) of the car. Find out more about how contract hire leasing works.

  • You simply need to advise the Funder to collect the car from you at a time & place to suit you. Find out more in our handy what happens at the end of my lease guide.

  • Yes, although if these are not settled straight away, the authority responsible for the offence will contact the Funder who supplied the car. An additional admin fee may be charged by the Funder if they have to pay the fine on your behalf.

  • With Contract Hire, you have the option to include a maintenance package for an additional monthly fee. This will cover you for routine tyres, routine maintenance, servicing & any MOT that falls within the contract duration.

  • You are responsible for insuring the car during the term of the contract. If your car is involved in an accident, you should contact your insurance company in the same way as you would for a privately owned car. We can offer GAP insurance which is designed to cover you if there is any shortfall (between the finance settlement figure & what your insurance company is willing to pay out) following a total loss, i.e. if the car was written off or stolen.

  • Funders will charge for damage that is over & above what is acceptable under the BVRLA's Fair Wear & Tear Guide. It is easy to find out what would be chargeable & what would be considered 'fair wear & tear', so you have the opportunity to put right any significant damage before you return the car.

  • Some customisation is acceptable & accessories to enable you to perform your job will usually be permitted. These can be included as part of your contract, so that you pay monthly for them, or you can sometimes opt to pay for them separately. It is always best to get permission from the finance company before customising your vehicle to avoid any unexpected charges.

  • Yes. However you will need to obtain the appropriate paperwork from the Funder in question. Remember to give sufficient notice for the documentation to be raised - usually around 7 working days.

  • No. When you Contract Hire a car, you are not permitted to use it for racing, rallying, speed testing or pace making. This usually isn't an issue for most of our customers.

  • There is no reason to think that your insurance premium will increase because you have chosen to lease your car on a Contract Hire agreement.

  • No, you will need to arrange insurance separately.

  • Yes. If the contract is in your company name, you can insure it under that name.

  • Yes. It is a requirement that you fully & comprehensively insure your car for the entire term of the contract.

  • The fact that you are contract hiring your car will not affect your ability to add other drivers to your insurance.

  • If the crash isn't your fault you will usually be able to claim a courtesy car through own insurance, or you may be supplied with a temporary replacement car by the repairing body shop.

  • No. We arrange delivery, free of charge to any mainland UK address.

  • You can basically choose any colour offered by the car manufacturer but, if you're working to a tight deadline & need a car more quickly, you may want to choose a car from our stock offers (usually delivered within 3 weeks) & then there may be less colour choice.

  • Yes. Road Tax is included in your monthly rentals for the full term of the contract.

  • It is possible to transfer your private plates onto your Contract Hire car. Most Funders will have processes in place for this & there may be a small charge for the service.

  • There are no hidden costs. Additional costs incurred could include excess mileage & any 'end of contract' damage (over & above 'fair wear & tear' as identified by the BVRLA) will be charged at the end of your contract by the Funder. The Funder may also make a nominal charge to administer any parking or speeding violation fines on your behalf (in addition to the cost of the fine itself).

  • A franchised dealer will deliver your new car to you, though not necessarily one that is local to you. We have negotiated the best rates with manufacturers & certain dealers.

  • This really depends on the car you choose. As most of our customers tend to opt for our special offer stock cars, we can usually deliver your new car within 3 weeks. If you decide to go for a factory ordered car, these can take longer, typically around 8 weeks.