Renting a Car: Contract Hire Explained
There are two types of contract hire; Company Contract Hire (generally referred to as just Contract Hire) and Personal Contract Hire. Both of these options have been around for some time. They have been well tried and have been proven to deliver considerable benefits when compared with the alternative of car purchasing schemed. Here we will look at some of the benefits that these schemes offer.
Contract Hire is appropriate for companies that need to make cars available to their staff, but do not wish the hassle and capital outlay of owning their own fleet of cars. One of the additional advantages for companies is that the car fleet does not appear on their balance sheet where it would be seen as a depreciating asset. Hire and maintenance costs are fixed and spread over the year which is of considerable benefits to companies who need to control their budgets closely.
Personal Contract Hire is ideal for an individual who might under normal circumstances have a company car and therefore be forced to pay additional income tax as a tax on benefits in kind, for example with a simple Volkswagen lease deal.
Just as in the case of businesses, the personal contract hirers would be advantages by not having a depreciating asset. With car maintenance costs being so high nowadays, and the fact that the need for maintenance is often unpredictable, it can be a huge advantage to include maintenance costs with the monthly rental charge so that one is protected from the unexpected. The costs are fixed, so you know exactly what you need to pay throughout the term of the contract.
Normally the costs of both Personal Contract Hire and Contract Hire are flexible and can be tailored to suit the requirements of the individual or the company. Costs are dependent on the number of miles driven along with the duration of the contract. Freeing companies and individuals from the hassle of car ownership can provide a major benefit.