Contract Hire (CH)

What is contract hire?

Contract Hire is essentially a long term car rental contract paid on a monthly basis over an agreed term - usually 2, 3 or 4 years. 

Contract hiring a new vehicle can offer both non-maintenance and full maintenance contracts. A full maintenance contract is where the finance provider is responsible for maintaining and servicing the vehicle and includes all costs due to fair wear and tear.

Leasing a car through contract hire is effectively long-term rental. You’ll pay fixed monthly payments to use your new car for an agreed period of time.

How does contract hire work?

The primary difference between leasing and other forms of car finance is that - with contract hire - you don’t have the option to purchase the car at the end of your agreement. However, the process is relatively straightforward:

• Pick your new car
• You'll then need to undergo a credit check
• You'll usually need to pay a few months' lease upfront
• You'll pay monthly payments - note that these are usually higher than vehicles leased through PCP
• There are a number of terms and conditions - such as the number of miles you're allowed to do - which you'll need to adhere to

Contract hire restrictions

As mentioned above, there are a number of restrictions when leasing a car on contract hire. These include:

Modifications: You won’t be able to modify your new car or van - unless you ask the leasing company to make these modifications before you enter into the agreement.

Mileage: As part of your agreement, you’ll agree to a certain number of miles you’ll do. Exceeding this agreed mileage will, however, result in penalty charges at the end of the agreement.

Condition: At the end of the agreement, the car must be returned in good condition, albeit with fair wear and tear permitted.

Should you get a new car on contract hire?

Assuming you don’t want to buy the car outright - in which case PCP, Hire Purchase or Lease Purchase would be better options - contract hire is an ideal way of getting a new car with fixed monthly payments. You’ll benefit from flexible terms, as well as being able to return the vehicle at the end of the contract, without having to worrying about having to sell the car or losing money due to deprecation.

Furthermore, there are a number of benefits of leasing a car in this way, particularly for businesses. Firstly, a business can offset the monthly payments against taxable profits, meaning a reduction in tax. Secondly, on contract hire, a car isn’t treated as an asset as it would be if it was bought on HP. Finally, if a business is VAT registered, it can reclaim the VAT if the car on contract hire is used exclusively for business.

Browse our full range of new cars and discount vans - from small city cars and family-friendly hatchbacks to practical MPVs and innovative SUVs. Contact us to learn more about the new car contract hire deals available.