CONTRACT HIRE

Available to any Business User.

You pay an amount each month for the 'use' of the chosen vehicle. The cost per month is directly related to how much the vehicle will depreciate over the period. Some vehicles, that hold their value well, could cost less per month than vehicles with a lower initial cash price.

At the end of the contract, just hand the vehicle back, subject to mileage and condition.

Each contract is calculated using the number of miles you expect to drive each year. If this is exceeded then you pay an additional mileage charge (pence per mile). Contracts can usually be amended if necessary.

Maintenance can be included to cover all servicing costs, tyres, batteries, wiper blades etc.

Vat is payable on the monthly rentals. For Vat registered businesses 50% of the Vat is reclaimable on the vehicle element of the contract. (100% reclaimable if the vehicle is used 100% for business use) 100% of the Vat is always reclaimable on the maintenance element.

PERSONAL CONTRACT HIRE - PCH

An option similar to Contract Hire but available to the private individual, the only difference is that although the VAT is still payable there is no ability to reclaim.

Can be ideal for people opting out of the company car scheme or wanting fixed cost motoring.

You pay an amount each month for the 'use' of the chosen vehicle. The cost per month is directly related to how much the vehicle will depreciate over the period. Some vehicles, that hold there value well, could cost less per month than vehicles with a lower initial cash price.

At the end of the contract, just hand the vehicle back, subject to mileage and condition.

Each contract is calculated based on the number of miles you expect to do each year. If this is exceeded then you pay an additional mileage charge (pence per mile). Contracts can usually be amended if necessary.

Maintenance can be included to cover all servicing costs, tyres, batteries, wiper blades etc.

PERSONAL CONTRACT PURCHASE - PCP

Although technically different, it is practically the same as Personal Contract Hire. With Personal Contract Purchase you have the option of owning the vehicle at the end. Initially this could sound a better option but it all depends on the prices of the contracts available at that time.

You pay the monthly payment over the given period and at the end you have the option to purchase the vehicle at a preset price (it should be equivalent to the value of the vehicle) or just hand the vehicle back, subject to agreed mileage and condition. The best of both worlds?

We always advise our private clients look at both Personal Contract Hire and Personal Contract Purchase. If PCP is cheaper or the same price, go for this contract as you can get the possible benefit of being able to buy the vehicle at the end of the contract (beneficial if you can sell it straight away for a profit). If PCH is cheaper, go for the hire option, why pay more just to have the option to purchase?

Referred to as Contract Purchase for a business but there is no ability to reclaim any VAT with this type of contract (unless it is 100% business use) so VAT registered businesses are usually better on Contract Hire.