How to Compare Contract Hire Quotes Fairly
How to Compare Contract Hire Quotes Fairly
You compare contract hire quotes on a like-for-like basis by ensuring every provider uses identical mileage limits, contract lengths, and vehicle specifications in their calculations. Standardising these inputs allows you to accurately measure the monthly cost against your budget without hidden variables skewing the price of your new van.
What it is in plain English
Contract hire is essentially a long-term rental agreement for a vehicle. You pay an initial rental followed by fixed monthly payments, after which you simply return the van to the finance company. Because you never own the asset, it removes the risks associated with vehicle depreciation and disposal, making it a predictable way to manage your fleet costs.
How it works step by step
Start by choosing the exact make, model, and trim level of the van you need. Next, define your annual mileage requirements and the duration of the contract, typically between two and four years. Once you have these fixed criteria, request quotes from multiple dealers simultaneously. Use these identical figures to create a spreadsheet that clearly outlines the initial deposit and the subsequent monthly rental for each offer.
What you pay and what is included
Your monthly payment covers the right to use the vehicle, while optional maintenance packages can be added to cover servicing, tyres, and breakdown assistance for a set fee. You remain responsible for fuel, insurance, and road tax, unless your agreement specifies that road tax is included. Always check if the quote accounts for VAT, as business quotes are often shown excluding tax.
Who it suits and who it does not
This method suits businesses that want to keep capital expenditure low and upgrade their fleet regularly without the burden of selling used vans. It is less ideal for owner-drivers who prefer to keep their vehicles long-term or those who exceed their estimated mileage significantly, as excess mileage charges can accumulate quickly and become expensive at the end of the term.
Questions to ask before you sign
Ask the dealer if maintenance is included in the quoted price or if it is an optional extra. Inquire about the exact excess mileage rate per mile so you know your potential exposure. Finally, confirm what condition the vehicle must be in upon return to avoid unexpected end-of-contract damage charges.
FAQs
How do you compare contract hire quotes on a like-for-like basis? To compare quotes fairly, you must ensure every dealer is quoting based on the same term length, annual mileage allowance, and exact vehicle specification, while also confirming if VAT and maintenance packages are included.
What happens if I go over my agreed mileage? If you exceed your annual mileage limit, you will be charged an excess mileage fee for every mile driven over the agreed total, which is calculated at a pence-per-mile rate specified in your contract.
Can I end a contract hire agreement early? Ending a contract hire agreement early is possible, but it usually involves paying a significant termination fee, which is often a large percentage of the remaining rentals left on the contract.
Is maintenance included in all contract hire quotes? No, maintenance is typically an optional add-on. Some quotes are 'non-maintained', meaning you pay for all servicing and repairs, while 'maintained' quotes bundle these costs into your monthly payment.
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