Vehicle Contract Hire
Modern vehicles with fixed costs and no depreciation worries
Vehicle Contract Hire is an efficient and affordable way for businesses to run modern, reliable vehicles without the long-term commitment or cost of ownership.
What is Vehicle Contract Hire?
Vehicle Contract Hire allows you to lease cars, vans, or trucks for a fixed period with set monthly payments, often including maintenance and servicing.
This helps you manage budgets more effectively, reduce admin, and avoid depreciation risks.
At the end of the contract, you simply return the vehicle and can upgrade to a new model, keeping your fleet modern and efficient.
Key Benefits
- ✓Fixed monthly costs
- ✓No depreciation worries
- ✓Low upfront costs
- ✓Regular vehicle upgrades
- ✓Tax-efficient
- ✓Less administration
Main Benefits of Vehicle Contract Hire
💰 Fixed monthly costs
Enjoy predictable payments that make budgeting easier, with servicing and maintenance often included in the contract.
📉 No depreciation worries
Since you don't own the vehicle, you avoid the risk of its value dropping over time.
💳 Low upfront costs
Start using the vehicle with a smaller initial outlay compared to purchasing outright.
🔄 Regular vehicle upgrades
Upgrade to new models at the end of each contract, keeping your fleet modern, efficient, and aligned with the latest technology and emissions standards.
📊 Tax-efficient
Monthly lease payments can often be claimed as an allowable business expense, helping reduce your taxable profit.
⚙️ Less administration
The leasing company typically handles maintenance, road tax, and disposal, freeing up your time to focus on running your business.
Things to Watch Out For
While vehicle contract hire offers flexibility and cost control, it's important to understand the potential drawbacks before committing:
- ⚠️You never own the vehicle: At the end of the contract, you must return it, with no option to buy, so you don't build any asset value.
- ⚠️Mileage limits apply: Contracts include agreed mileage caps; exceeding them can result in costly excess mileage charges.
- ⚠️Fair wear and tear charges: You must return the vehicle in good condition; damage beyond normal wear can lead to additional fees.
- ⚠️Early termination penalties: Ending the agreement early can be expensive, as you may have to pay remaining rentals or termination fees.
- ⚠️Fixed-term commitment: You're tied into the contract for the agreed period, so changes in business needs can be harder to manage.
- ⚠️Maintenance responsibilities: While some contracts include servicing, others don't — make sure you know who covers maintenance, tyres, and repairs.
- ⚠️Credit checks and VAT: Approval is subject to a credit assessment, and VAT is payable on monthly rentals, which can affect cash flow.
Pros and Cons at a Glance
| ✅ Pros of Vehicle Contract Hire | ⚠️ Cons of Vehicle Contract Hire |
|---|---|
| Fixed monthly payments make budgeting easy | You never own the vehicle: it must be returned at the end of the contract |
| Low initial outlay compared to purchasing outright | Early termination can result in high cancellation fees |
| No worries about depreciation or resale value | Mileage limits apply: excess mileage charges can be expensive |
| Option to include maintenance and servicing for convenience | Damage beyond fair wear and tear may incur additional costs |
| Regular access to new, fuel-efficient, and low-emission vehicles | Long-term contracts may limit flexibility if your business needs change |
| Potential tax benefits: lease payments are often deductible as a business expense | VAT is payable on monthly rentals, which can affect cash flow |
| Less administration: road tax and disposal are usually handled by the leasing company | You can't modify or customise the vehicle without permission |
Ready to Explore Vehicle Contract Hire?
Speak to MV Asset Finance today to discover how Vehicle Contract Hire can keep your business moving forward with confidence.
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