This is like long-term rental and can include service and maintenance, breakdown cover and replacement vehicle.
The monthly payments are subject to VAT, which can be reclaimed (100% for commercial vehicles and 50% for cars).
The leasing company always owns the vehicle. The monthly rental is calculated from the length of contract and the estimated miles driven.
At the end of the period the vehicle is returned to the contract hire company. It is treated as "off balance sheet funding" in a company's accounts.
It is a completely risk free package for the customer and almost always cheaper than outright purchase because of the extra discounts and support received from manufacturers and passed on to the hirer in the monthly rental.
Contract Hire / Leasing Features:
fixed cost motoring
fully inclusive maintenance available
very cost effective
vat efficient – part or fully reclaimable
low initial payment
low monthly payment
completely no risk option
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