Contract Hire, (sometimes referred to as an Operating Lease for Mercedes-Benz agreements), is a long term rental agreement. Contracts range from 24 to 60 months and are tailored to the businesses requirements.
Minimum capital expenditure
Accurate monthly budgeting
Improved cash flow
Fixed interest rates
Rentals can be offset against the businesses profits. Cars with a CO2 output above 130g/km are currently subject to a 15% disallowance on the amount of the rental that can be claimed against the businesses taxation, for contract-hired cars with a CO2 output of 130g/km or below, there is currently no disallowance.
Reduced administration
On-going advice and support
Road Fund Licence provided (vehicle excise duty paid) for duration of contract
Optional maintenance package
Optional breakdown rescue cover
Optional replacement vehicle cover in event of breakdown
Optional GAP insurance which provides cover for the shortfall between the outstanding finance and the insurance value if the vehicle is declared a write-off by your insurance company
Early termination can be expensive
If you do more miles than stated in your contract you will be charged excess mileage for each mile over that stated in your contract
You must look after the vehicle and return it in a well maintained condition otherwise you will be charged for any damage over and above that stated in the 'Fair Wear and Tear Guide'
You must have fully comprehensive vehicle insurance
You will never own the vehicle as there is no option to buy it
The Contract Hire Company reclaims the VAT on the original purchase, which reduces your monthly rentals (which are + VAT). Contract Hire is a very popular choice for VAT registered companies as they can claim back 50% of the VAT on the finance element for cars and generally 100% for commercials (subject to no private use, no exempt turnover and not being on the Flat Rate VAT Scheme).
On contracts with maintenance the VAT on the service element is 100% recoverable. One of the major benefits is that there are no disposal worries as the future value is underwritten by the leasing company. Another benefit of Contract Hire is that it is generally 'off balance sheet funding' (subject to legislation change) which means it can improve your gearing ratio (assets to borrowing ratio) and therefore possibly your borrowing ability in the future.
Please note that some of our Mercedes Benz leasing contracts may be referred to as "Operating Lease", this has all of the benefits as above however the road fund licence is included for the first year only and the car will be registered in your/ your company name. You will receive the V5c registration document as the registered keeper making it significantly easier to put a cherished plate on the car, obtain parking permits and sometimes allowing cheaper insurance premiums.
As the name suggests Personal Contract Hire (also known as personal leasing) is simply contract hire but for individuals
Flexible initial payment
Fixed term contract
Fixed mileage contract
Fixed cost motoring
Flexible profiles to suit you
You only pay for the use of the vehicle
At the end of your contract simply hand the vehicle back
Option of including maintenance with the contract
No depreciation or disposal risk
Vehicle must be returned in a well maintained condition
Early termination can be expensive
You must have fully comprehensive vehicle insurance
You will never own the vehicle
More Information on Personal Contract Hire:
It benefits customers wishing to eliminate the financial risk associated with disposing of a vehicle. Contracts are usually taken over two, three or four years, providing a high level of flexibility. Some contracts can be formally extended beyond the end of contract date if required. Just ask and we can answer any of your questions regarding extending your contract.
PCH is very similar to business Contract Hire; both are based on a fixed annual mileage agreed on inception of a contract. You will need to decide how many miles you drive each year before quotations can be obtained. Once you have stated how many miles you drive in a year and considered which vehicle you would like to lease a quote can be created for you by one of our sales team.
Regulations with regard to making mileage amendments after contracts are live vary from funder to funder, so it is always better to be as accurate as you can be. If you do exceed the agreed allowance at the end of your contract you will pay an excess mileage charge, which will have been agreed upon prior to signing the finance agreement.
Please remember this when deciding upon you annual mileage. If you are looking to have predictable motoring costs adding maintenance to your monthly payment is easy. Maintenance is there to put your mind at rest should any challenges arise with your vehicle and generally covers servicing, routine maintenance, tyres, exhausts and batteries.
Please note that it is responsibility of the person named on the finance agreement to arrange and pay for fully comprehensive insurance for the vehicle. It is important that the vehicle is returned in accordance with the guidelines set out in the 'Fair Wear and Tear Guide', a copy of which is made available to customers when they are near the end of their PCH agreement.