Contract Hire / Leasing

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Contract Hire / Leasing Information

Vehicle leasing is the hire/leasing of a car for a certain amount of time. Vehicle leasing if often used by a large number of businesses as a cost effective alternative to purchasing a fleet of vehicles outright. The main difference between purchasing and leasing is that leasing vehicles is normally anything from 2, 3 or even 4 years and will be returned back to the leasing company when the time period is up, whereas outright purchasing leaves the company with the added hassle of having to sell these vehicles on for a much lower price than what they had paid.

Contract hire/leasing agreements normally include an annual mileage allowance for that vehicle (usually between 12,000-15,000 miles), although extended mileage allowances can be agreed, this is normally agreed at the start of the contract hire/leasing agreement. General wear and tear is also taken into consideration and this will also be detailed what 'general wear and tear' is classed as, this detailing differs from company to company. If the limit of wear and tear is exceeded then additional costs can be incurred by the lessee. Contract hire/leasing agreements can also include a maintenance contract, usually included for an additional fee.

Lease payments on vehicles are calculated in a similar way that a loan would be repaid and at the end of the lease term, the company leasing the vehicle must either return the vehicle or they alos have the option of purchasing the vehicle outright for a set price that is normally set at the time of when the contract hire/leasing agreement is signed.

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