Van Contract Hire

What is Van Contract Hire?

You can lease a van through contract hire, similar to finance leasing, which is where you pay a monthly fee and have a fixed mileage limit. We refer to contract hire as being similar to vehicle rental; you pay for the use of the vehicle and simply hand it back to the finance company when you are finished. The difference is that with contract hire, you do not have the choice of a balloon payment or selling the vehicle and you will be subject to damage costs and excess mileage charges. You would pay a fixed price each month for an agreed period – at the end of the contract you must return the vehicle or ask for an extension.

Payment

The initial rental or deposit is the equivalent of 1 – 12 months rentals in advance, plus the VAT on this figure. Van contract hire is also known as an operating lease but this term is rarely used. You can have the added option of a maintenance package which will give you a fixed cost for all your servicing, maintenance and tyre needs. You don’t have to worry about having to sell the vehicle at the end of the contract or any depreciation.

Things to know

The contract is mileage sensitive; meaning that if you exceed the mileage limit given you could be subject to extra fees at the end of your contract. The vehicle is subjected to an inspection, where any reconditioning costs are charged to the customer – Ideal for VAT registered larger fleet operators. Rentals are 100% allowable against taxable profits with no private use. You have total budgetary control – fixed costs, as long as you stay within the mileage. At the end of the contract, simply hand the vehicle back.