About Business Contract Hire

About Business Contract Hire
Susan Graham

Posted by

Susan Graham

August 2019

There are two types of Business Contract Hire Agreement available:

  • Non-regulated (limited companies and large partnerships)
  • Regulated (small partnerships and sole traders)

The only difference between each of these is that you will be able to make contract amendments to non-regulated business contract hire agreements, such as, but not limited to, amending mileage limits or term. However, this option is not available for regulated Business Contract Hire agreements.

Business Contract Hire (BCH) is a lease that allows you to drive a new vehicle over an agreed period of time and mileage. This gives you cost-effective access to new vehicles and none of those large drops in value normally associated with owning a new vehicle outright. You also have the option to include vehicle service maintenance and repairs in a maintenance rental, which means you can budget predictably for all your business motoring.

When a Business Contract Hire agreement ends there are two options available to you. These are:

  1. Return the vehicle to the finance provider, or:
  2. Get an extension on the lease period in agreement with the finance provider.

There is no option to purchase the vehicle at the end of a Business Contract Hire agreement for either regulated or non-regulated contracts. Leased vehicles cannot be used for hire and reward purposes such as taxi or chauffeur services.

So what are the benefits of contract hire?
  • Low monthly repayments
  • Flexible terms from 24 to 60 months
  • Road Fund Licence is included for the contracted period
  • Option to extend the lease period at the end of the contract
  • Return the vehicle at end of the contract and start a new agreement
  • No hassles with selling the car or losing money on the car’s value
And what are the potential risks you face?
  • If the vehicle is returned with damage that goes beyond established industry standard set out by the British Vehicle Rental and Leasing Association (BVRLA), known as Fair Wear and Tear you may incur charges to repair that damage. For more information read our Fair Wear and Tear Guides.
  • If you terminate the lease early, you may be liable to pay an early termination fee.
  • If you have driven the vehicle beyond the agreed mileage limit, you will be charged an excess mileage rate which is outlined in your agreement.

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