Business Contract Hire

Business Contract Hire works in much the same way as Hire Purchase, but it’s not available to people who apply for it on a personal basis.

The car needs to be used in connection with a business, though it can also be used as a private vehicle, as company cars often are, too.

With BCH, a business takes out a long-term finance agreement to effectively lease or rent a car. The length of the agreement is to be agreed, but typically ranges from 24 months – two years – up to 60 months.  Depending on the needs of the business, you may decide to opt for a 24 month term if you intend to change cars every couple of years, switching for a new model.

The business pays a fixed rental cost every month for the duration of the agreement, and must maintain those payments.

There will be other conditions attached to the terms of the Business Contract Hire plan, such as an agreed annual mileage limit.

Think about what the car will be used for, and calculate its estimated mileage every year; if you exceed the mileage limit, it’s likely the business will have to pay for the extra miles, at the end of the agreement.

The benefit for businesses who finance a car this way include low monthly payments due to the fact that 50% of the VAT can be reclaimed against the cost. If a business leases a van on Business Contract Hire, 100% of the VAT can be claimed back.

And, with cars or vans, 100% of VAT on any maintenance costs – servicing, for example – can also be claimed back.

Leasing a car on Business Contract Hire with Dick Lovett is simple. Just follow these steps:

1. Choose the make and model of car your business needs. You can view our range of new cars online, or across our many dealerships in the South West and Wales.

2. Agree the term and duration of the Business Contract Hire agreement, the cost of monthly payments, and set an annual mileage limit.

3. Finally, just arrange to collect your vehicle.

There is no option to buy a car that’s leased on a Business Contract Hire plan, so at the end of the agreement, just return the vehicle to the dealership.

Provided there are no excess costs to pay – there might be some financial adjustment if the business has exceeded the agreed mileage limits – there’s nothing more to do.

With the car returned, the business is free to find another vehicle to lease by Business Contract Car Hire, if it chooses.

Click here to explore business car leasing offers available at Dick Lovett.

Alternatively, if you’re looking to provide all of your employees with the opportunity to lease a brand-new car at the best price, a salary sacrifice car scheme could be worth considering.