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Car Leasing is one of the fastest-growing markets in the UK and for several years has been an excellent way for businesses to fund their fleet while not needing to shell out the full cost of a vehicle.

If you’re looking at leasing a car through a business, or you work for a business that is offering you a company vehicle, then leasing is one of the best choices available to you.

Business Contract Hire Fully Explained

Business Contract Hire, usually abbreviated to ‘BCH’, is a form of business car leasing that is designed to operate in a way where a vehicle lease agreement is tied to a sole trader, partnerships and limited companies as a financial asset, rather than linked to an individual.

Contract Hire works like a long-term rental agreement. You simply rent a vehicle over a set number of years (measured in months – i.e. 24, 36, 48) and then the vehicle is collected at the end, freeing you and your business from having to administrate the ownership of a vehicle and subsequently sell it at a heavily reduced rate compared to what you would have spent on it when brand new (depreciated value).

The concept is simple enough:

• You choose a brand new vehicle that you want and is suitable for your business.
• You can add some fun and functional options to it.
• We then order that vehicle through a franchised dealership.
• A Finance Company (a.k.a. Funder) then buys that vehicle.
• You are then in agreement with the Funder, paying a  fixed payment each month.
• The Funder then collects the vehicle at the end of your contract hire term.

NB: There are minor variations and additions to this process if you are looking at procuring and managing a large fleet of vehicles for your business. Our Fleet Management specialists will be happy to discuss this with you personally.

What are the Benefits of Business Contract Hire?

A fully-fledged professional such as yourself will potentially know a lot of this already and/or will have probably had a thrilling conversation with your bookkeeper about the matter. However, we are all about inclusivity here, so I need to ensure that everyone is on the same page. Therefore, here are some reasons to consider why leasing may be good for you and your business:

• You get to regularly use a brand new factory fresh car – having a more economical and reliable vehicle
• Fixed monthly payments – making it easier to account for
• Road Tax included – for the duration of the contract
• You can have the maintenance covered – with an optional maintenance package that covers the cost of servicing, general maintenance and replacement tyres (subject to the level of cover and provider’s T&Cs)
• No ownership of a depreciating asset – alleviating the risk of your company losing £1,000s in depreciation
• Full manufacturer’s warranty
• Free delivery to any mainland UK address – no need to travel to a dealership, it comes right to your door! (Unless your door is above ground floor … cars don’t hover yet)
• Your business can reclaim the tax – if your business is VAT registered, then you can reclaim 50% of the VAT (or 100% for commercial use vans!)
• You can get a better vehicle for less money – This sometimes happens because the rentals are affected by the residual value of the car, not just the purchase price