Business Van Contract Hire Deals Explained

Contract Hire is a rental agreement that allows you to drive a Volkswagen Commercial Vehicle without needing to own it. Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no disposal risk. You won’t own the vehicle and therefore won’t have the worry of ownership, you just have to hand it back at the end.

Contract Hire - cost of your vehicle infographic

How does Contract Hire work?

Once you have chosen your vehicle you need to decide on your initial rental, how many miles you drive each year, and how long you want to lease the vehicle for. These will be used to calculate your monthly payments.

You can also choose to include a level of servicing and maintenance into your monthly rental, keeping your vehicle in good condition.

Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.

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The benefits of Contract Hire

1

You can include servicing

As part of a Contract Hire agreement you can include different levels of servicing, giving you one monthly payment for a vehicle and upkeep.

2

Tax deductible

If you are leasing as a business customer, you may be able to claim back the tax on Contract Hire agreements.

3

No risks of ownership

As Contract Hire is a leasing agreement, you have no risk of the vehicle falling in value. You simply pay your monthly rentals and hand the vehicle back subject to fair, wear and tear and excess mileage.

4

Update your vehicle regularly

As you simply hand the vehicle back at the end of each agreement, it means you are able to keep upgrading your vehicle for the newest model.

A worker unloading a Transporter 6.1 van

Would Contract Hire suit me?

Contract Hire is a straightforward leasing agreement, which can help a range of people get into a new vehicle. It may be the best option for you if:

You don’t want to own the vehicle
You want to upgrade regularly
You take good care of you vehicles

The end of your agreement

Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.

Inspection and Collection Process
When your agreement comes to an end, your vehicle will undergo an end of contract inspection by our collection agents. Our collection agents will attempt to make contact with you 6-8 weeks before the end of your agreement to arrange a convenient time to inspect and collect your vehicle. Their trained inspector will inspect your vehicle in line with the British Vehicle Rental and Leasing Association (BVRLA) Fair Wear & Tear Guidelines. The inspector will record any damage (and cost of repair) that falls outside of the guidelines and you’ll be asked to sign to confirm your acceptance of the inspection report.

FAQ's

Can I get a Contract Hire agreement?

What benefits does Contract Hire offer me?

Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no depreciation risk.

You won’t own the vehicle and therefore won’t have the worry of ownership, you just have to hand it back at the end
There is no additional final payment at the end of the agreement (subject to excess mileage and fair wear and tear)- If you are a business user:
A proportion of the rentals may be claimable as an expense against taxable profits*
An element of the VAT on rentals may be recoverable by VAT registered businesses**
You can build in a service, maintenance and tyres plan to make budgeting even easier

_{*This is subject to a 50% block where there is any element of private use of a motor car.
**The above note is intended as a summary of the principles of VAT and tax in this complex area. It is not intended to be and should not be construed as constituting tax advice and we make no representations, warranties or guarantees, whether express or implied, that the content is accurate, complete or up-to-date. Volkswagen Commercial Vehicle Financial Services (UK) Limited cannot be held liable in any way for any reliance upon this document, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, even if foreseeable. For specific tax advice relating to your particular set of circumstances, you should contact your own HMRC officer or your usual VAT / tax advisers.}

What happens at the end of my agreement?

Important information to consider

Ownership of the vehicle will always remain with Volkswagen Commercial Vehicle Financial Services and it is really important that you keep up to date with paying your monthly rentals. Please contact us if you are having any difficulties as the vehicle may be at risk if you don’t.
Contract Hire agreements are not designed to be settled early. If you wish to end your agreement early (for example, due to a change in circumstances) you can request an early termination quote to cover the cost of the remaining rentals.
If you exceed the agreed mileage set out in your agreement then excess mileage charges will apply. If during your agreement you think you will go over your anticipated mileage then please contact Volkswagen Commercial Vehicle Financial Services to discuss the options available.
It is important to keep your vehicle in good condition as you may be charged for any damage that goes beyond the BVRLA’s fair wear and tear standards.