If you’re considering buying a new car for yourself or your
company, you are spoilt for choice by the various finance options
available. However, one of the most consistently popular choices is
Contract Hire – because it often proves the most cost-effective and
the easiest to manage.
So, how do Contract Hire agreements work? This guide to contract
hire will explain.
Whenever you hear the term ‘Car Leasing’, chances are that it is
referring to Contract Hire as it is the most common form of vehicle
leasing agreement.
Basically, Contract Hire means agreeing to take control of a car
for a fixed period – it’s yours to drive but it is never actually
yours to own. Instead, you reach an agreement with the leasing
company to make fixed payments (usually monthly) for the duration
of the contractual period. At the end of the Contract, you return
the car to the Contract Hire Company.
Your Contract Hire payments will be determined by a number of
factors:
- Firstly, there is the retail price of the car – that is the
price you would have to pay if you were to buy it outright.
- Then, there is the residual value of the car – that is it’s
estimated worth at the end of the contract taking into account
(depreciation, mileage, etc.).
- You then pay the difference between the two figures in monthly
instalments, including the Finance Companie's chrages. So the
higher the residual value of the car, the lower your payments will
be.
For the best Contract Hire deals in the UK, contact
the Autobahn sales team.
Email: Sales@autobahn.co.uk or call
08456 444993 option 1.
<skip to top>
Many of the advantages and disadvantages of Contract Hire are a
matter of perception – i.e. what’s right for one driver might be
wrong for another, and vice-versa.
For example, by taking out a Contract Hire agreement you never take
ownership of the car. That may be a problem for some, but an
advantage for others who like the idea of being able to return the
car and walk away without dealing with re-sales, etc. Many Contract
Hire agreements also include maintenance packages – meaning all you
have to worry about is comprehensive car insurance and putting fuel
in the tank.
Contract Hire offers fixed-cost motoring – you know exactly what
you will have to pay and when you have to pay it, helping you to
budget. This also makes Contract Hire popular among VAT-registered
companies who can reclaim up 50% of the total payments made and up
to 100% of the maintenance package costs. Hire rental tax
allowances can also be applied.
On the downside, you must return the car at the end of the contract
– there is no option to buy as there is with a Personal Contract
Purchase agreement.
For the best Contract Hire deals in the UK, contact
the Autobahn sales team.
Email: Sales@autobahn.co.uk or call
08456 444993 option 1.
<skip to top>
Think about your motoring habits before deciding if Contract
Hire is right for you. If you travel a lot, then your mileage will
be high which will increase the car’s depreciation and therefore
your monthly payments. If you have a flexible job and have to
travel varied distances it can also be difficult to estimate your
mileage – and if you exceed your mileage limit you’ll face
additional charges.
However, if you want to be able to budget with fixed monthly costs,
like the idea of not having to sell the car on and want to drive a
new vehicle every few years, then Contract Hire is ideal.
It’s also perfect for businesses as it allows them to update
vehicles regularly with the latest models, avoiding large
down-payments.
If you think Contract Hire is the right form of car finance for you
or you wish to discuss your finance options, please contact the
Autobahn Sales Team.
For the best Contract Hire deals in the UK, contact
the Autobahn sales team.
Email: Sales@autobahn.co.uk or Telephone
08456 444993 option 1.
<skip to top>
<<Back to Finance your
Porsche