Contract Hire packages are an operating lease, offered with or without maintenance. The finance company, not the user, bears the risk of depreciation.
Here's how it works:-
- You agree an annual mileage and the finance company agrees a Residual Value for the vehicle.
- Usually 3 months rental in advance followed by 21 or 33 payments.
- With or without maintenance is decided to determine monthly rental.
- You chose level of maintenance.
- Higher initial payments can be agreed to reduce monthly costs.
- Road Fund license included.
- At the end of the contract the vehicle is simply handed back subject to the agreed mileage and "fair wear & tear" conditions.
Benefits:-
- Releases capital tied up in your vehicles.
- Fixed monthly budgeting for motoring costs.
- Low cost all embracing maintenance package.
- No depreciation risk.
- Rentals may be off set against taxable profits.
- Additional credit line.
- Off balance sheet funding.
- Reduces fleet administration.
