Volkswagen finance made simple for your business

BUSINESS CONTRACT HIRE

Considering the best car finance options for your business needs? Car leasing can benefit your company in a number of ways, and it is a popular option for many. 

What is business contract hire?

A business contract hire (BCH) is a long-term arrangement which allows a business to pay to lease a car or van over an agreed amount of time. Unlike with a business contract purchase, when the leasing contract finishes, the car is returned to the leaser.

How does business contract hire work?

A business contract hire involves paying a fixed monthly rental cost over a set number of months (usually between 24 and 48 months). This amount is determined by the cost of the vehicle and length of contract. It also sets an annual mileage limit; you will likely pay an extra fee if this is exceeded when returning the car. For most types of BCH, payments are tax-deductible for corporation tax purposes. 

Why is business contract hire a good option?

Car and van leasing is popular because it provides access to a vehicle without any of the trouble that comes with actually owning it. Firstly, the monthly rate is usually lower than paying to own a vehicle. This fixed rate may also include the leasing service, maintenance, servicing and road tax, and companies can claim back 100% of the VAT. There’s also no need to worry about depreciation risk at the end of the contract, and you don’t need to deal with the trouble of selling the car. A business contract hire also gives you the flexibility to change vehicles every few years. 

PERSONAL CONTRACT HIRE

Personal contract hire (PCH) is one way of taking a car home today, and is a popular option for fixed cost motoring.

What is personal contract hire?

Personal contract hire – also often referred to as a personal lease – is the long-term rental of a new car available to individuals.

How does personal contract hire work?

With a personal contract hire agreement, you pay an initial deposit then make fixed monthly payments, which are made over the agreed contract length. When the contract ends you return the vehicle.

How does personal contract hire differ from personal contract purchase?

They key difference between personal contract hire and personal contract purchase, is that PCH has no option to purchase at the end of the agreement. Another factor to consider is that your car is not taxed with a PCP, but it is taxed under a PCH (you don’t own the car and therefore are not liable to keep it taxed).

Why is personal contract hire a good option?

You can drive a car for a lower cost than purchasing it outright.

Monthly payment are often cheaper compared to other finance agreements.

You have the freedom to change your car every few years.

There's no need to worry about negative equity.

Maintenance packages are available.

Road tax is included.

Although there is no option to buy the car at the end of the agreement, this gives you the freedom to choose a different model for your next car.

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