What is it?
Contract Hire is basically a rental agreement that allows a customer to take control of a vehicle for a fixed period of time, paying a fixed monthly fee for the duration of the term and then return the vehicle at the end of the contract.
The payments are calculated by looking at initial cost of the vehicle, projected annual mileage and depreciation of the vehicle, the payment is the difference between the initial cost and the final residual value of the vehicle, so the higher the residual the lower the payment! The customer is not responsible for the disposal or sale price of the vehicle at the end of the contract – which makes it a very easy and risk free way to run a vehicle.
Advantages of Contract Hire:
- Service packages can be added to your agreement further fixing your monthly costs.
- Hire rental tax allowances also apply.
- A new vehicle every few years.
- Easy disposal at the end of the agreement.