Fixed Rates
100% Tax Deductible
Zero Value Depreciation
What is Contract Hire?
Contract hire is a type of vehicle financing plan to fund the use of a vehicle over a sustained period of time.
This finance plan requires a deposit which can be as little as your first monthly rental, and at the end of the contract, you return the vehicle to the funder. There are terms and conditions which could incur additional costs on return, including mileage and vehicle condition.
The Advantages of Contract Hire
There are a few distinct advantages associated with contract hire:
- Fixed Rates: Contract hire ensures that monthly payments remain consistent for the duration of your contract. This allows you to forecast budgets much more accurately.
- Zero Value Depreciation: During a contract hire agreement, the vehicle remains in the funders posession. This means a reduced amount of responsibility in terms of vehicle ownership.
- 100% Tax Deductible: If your vehicle is used solely for business purposes, contract hire permits you to offset 100% of the rental payments’ against your pre-tax profit
- Reduced Maintenance: As part of your rental, you also have the option of adding servicing costs to your package for added convenience.
The Disadvantages of Contract Hire
Some of the disadvantages of contract hire include:
- Mileage Restrictions: Contract hire imposes mileage restrictions from the outset, which some find restrictive. Exceeding this agreement will incur additional fees.
- High Termination Fees: If you decide to end your contract early, termination costs can be very high.
- Zero Ownership Potential: You’ll be unable to take ownership of the vehicle.
- Wear & Tear Costs: All vehicles under a contract hire agreement must be returned in a good condition. Otherwise, you will be charged over and above what’s stated in the Fair Wear and Tear Guide.
Is Contract Hire For You?
If you like the sound of contract hire, consider giving the van financing experts at Transitfast a call. We’ll be able to talk you through all the options we have available and find the perfect deal for you.
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If there’s anything you’re unsure of, our team is more than happy to help. Contact us via email or phone and we’ll get back to you as soon as we can.
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