CONTRACT HIRE
Contract Hire is typically referred to as a ‘lease’. It is in fact classed as an ‘operating lease’ for taxation purposes which means that it is totally ‘off’ the balance sheet. In addition, the monthly rentals may be wholly or partly allowable against taxable profits.
Contract Hire is a flexible financing method whereby the fixed monthly rentals cold include items such as:
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road fund licence servicing repairs tyres This is a total finance package designed to meet a customer’s specific requirements, assisting in total budgetary control when running a vehicle fleet.
The vehicle is ‘hired’ to the customer for a fixed period with a fixed rental – usually monthly – at an agreed annual mileage.
As with Finance Lease, there is an initial deposit comprising rentals in advance. Monthly rentals are calculated on the difference between the original purchase price and the projected sales proceeds at the end of the agreement when the vehicle is returned to the finance company and sold.
Contract Hire allows the customer to acquire a higher specification vehicle than might otherwise have been considered. Contract Hire also enables a fleet to be replaced on a regular cycle, improving a customer’s brand image.
