A personal contract hire is a type of long-term rental that allows individuals to acquire vehicles conveniently and cost-effectively. It is a great option for motorists who prefer to change cars every couple of years and find outright vehicle purchases unaffordable.
In contract hire leasing, the individual (lessee) leases the car for a certain time period (1 year- 5 years) and makes fixed lease payments on a monthly basis. At the end of the lease term, the lessee has the option to return the vehicle or buy it. The lease payments will include VAT, which the lessee cannot reclaim. It is claimed back when the lease company purchases the vehicle.
The benefits of personal contract hire leasing include the flexibility to plan budgets more easily owing to the fixed monthly fee. The monthly installments will include the maintenance costs associated with the vehicle.
The lessee doesn’t have to worry about ownerships risks as the leasing company owns the car even during the contract term. The lessee does not have to deal with hassles related to vehicle disposal or sale, which is not the case when the vehicle is purchased. The vehicle’s depreciating value over time is also not a concern for the lessee.