A Business Contract Hire agreement is a leasing option available on cars and vans. It is open to sole traders, limited companies and partnerships. Under a Contract Hire agreement, the car or van of the lessor’s choice is leased for a set time period at a fixed monthly cost. The agreement will also include a maximum mileage allowance.
The monthly rental fee is based on a number of factors, including the original cost of the vehicle, the length of the contract (again, usually 2-4 years) and mileage that the vehicle is expected to cover. The final monthly cost will also include an allowance for depreciation by the end of the agreement.
Contract Hire agreements will also usually include an optional maintenance package for oil and filter servicing, brake fluid changes etc.
While these are not compulsory, they usually make financial sense, unless you have a good relationship with an existing garage you trust.
At the end of your agreement, you hand the vehicle back. As long as you’ve looked after the vehicle and kept within your contracted mileage there will be no additional fees.