CONTRACT hire is the most popular way of leasing a business car.
More than half of all new company cars registered each year are funded using contract hire leasing.
So how does it work?
A vehicle is leased to an organisation for a set time and specified mileage, in return for an initial fee (usually between three- to six-months’ rental) and a subsequent monthly charge. At the end of the contractual period, it is returned to the leasing company.
With contract hire you lease a car over a set period of time and mileage for a monthly lease rate
This type of hire removes many of the risks of business car ownership, including depreciation, servicing costs if maintenance is included, and eventual sale.
Meanwhile your business benefits from the car leasing company’s greater buying power and knowledge of the used car market.
However, you could also miss out on any potential benefits of business car ownership, for example, lower than anticipated maintenance costs or an unexpected upturn in the residual value of a particular vehicle.
For most small businesses a three-year time span and an annual 10,000 miles is sufficient. You’ll often see this referred to as a 36 month/30,000 mile agreement. But you can vary it to your requirements.