What Happens at the End of a Contract Hire Agreement?
What it is in plain English
At the end of a contract hire agreement, you return your commercial vehicle to the leasing provider rather than taking ownership of it. This simple arrangement allows you to drive a modern van for a fixed period without the risks associated with depreciation or the eventual burden of selling a used vehicle at the end of its life.
How it works step by step
The contract hire end of lease process begins a few months before your agreement concludes, when the finance company will contact you to arrange a collection date. A professional inspector will then visit your premises to conduct a vehicle condition check. Once the inspection is complete and the van is collected, your responsibility for the vehicle legally ends, provided all terms were met.
What you pay and what is included
When your contract closes, you typically only pay for any excess mileage charges or damage that falls outside the standard industry fair wear and tear guidelines. The monthly payments you made throughout the term cover the depreciation of the van, meaning you do not pay for the vehicle's full value, which is why your costs are manageable and predictable.
Who it suits and who it does not
Contract hire is ideal for business owners who want to keep their fleet updated with the latest, most fuel-efficient models while maintaining fixed monthly cash flow. It does not suit those who wish to own their vehicle as an asset on their balance sheet or drivers who expect to exceed their agreed annual mileage limits significantly.
Questions to ask before you sign
Before committing, ask your dealer what the specific fair wear and tear standards are for that manufacturer, as these can vary slightly. You should also confirm what the excess mileage penalty is per mile and clarify exactly what happens if you wish to terminate your contract early due to a change in business circumstances.
Frequently asked questions
FAQs
What do I need to do when a contract hire agreement ends? You need to ensure the vehicle is clean, serviced according to the manufacturer's schedule, and all original items like spare keys and manuals are present for the collection inspector.
Will I be charged for every scratch on the van? No, minor scratches and light stone chips that are considered fair wear and tear are expected for a working commercial vehicle and are generally not chargeable.
Can I extend my contract if I am not ready for a new van? Many providers offer the option to extend your current agreement on a month-to-month basis if you need more time, though you should check your specific terms.
What happens if I have gone over my agreed mileage? If you exceed the total agreed mileage, you will be required to pay an excess mileage charge, which is calculated on a pence-per-mile basis as stipulated in your original contract.
contracthire.tv is a trading name of Swiss Vans Ltd, authorised and regulated by the Financial Conduct Authority (FRN 668283) as a credit broker, not a lender.