What is contract hire?

Business contract hire is a way of paying a fixed monthly rental to use a car or van for an agreed term and mileage, without buying it. You hand the vehicle back at the end. The vehicle is owned by a finance company, and a broker such as contracthire.tv arranges the agreement.

The detail

Who owns the vehicle. The finance company (the funder) owns it throughout. You have use of it for the term, and you never take ownership.

What you agree at the start. Before you sign, you settle:

• the length of the agreement (the term);
• the maximum mileage allowed over that term;
• the initial rental, if one applies;
• the monthly rental;
• whether maintenance is included or you arrange it yourself.

What you are responsible for. You insure the vehicle and keep it serviced, either through an included maintenance package or on your own account. You return it in fair condition for its age and mileage, following the funder's guidelines on fair wear and tear.

What can add cost. Exceeding the agreed mileage usually leads to an excess mileage charge. Damage beyond fair wear and tear, or ending the agreement early, can also bring charges. Check these terms before signing.

Business use. This page covers business contract hire, so the agreement is with a company, sole trader or other business rather than a private individual. Whether the funder offers an agreement depends on its own checks, including the status of the business.

Who we are. 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. We arrange agreements with funders, and any agreement is subject to the funder's acceptance.

A worked example with no invented figures

Suppose a business needs a van for deliveries and wants to know what its costs will look like before it commits.

1. It chooses a van and decides how long it needs it. It also estimates how many miles the van will cover each year, which sets the mileage limit.
2. A broker compares quotes from funders for that vehicle, term and mileage. Each quote shows the monthly rental and any initial rental.
3. The business reads the terms, including the excess mileage rate and the condition standards for return, and chooses whether to go ahead. The chosen funder then carries out its checks.
4. If the funder accepts the application, the van is delivered and the business pays the same rental each month for the term.
5. At the end, the business returns the van. If it still needs a vehicle, it can start a new agreement.

If the van covers more miles than expected, the business pays the excess mileage charge set out in the agreement. If it covers fewer, the monthly rental does not normally change. A realistic mileage estimate at the start therefore matters.

Related questions

• How does contract hire differ from leasing or buying a vehicle?
• What does fair wear and tear mean when you hand a vehicle back?
• Is maintenance included in contract hire?
• Can a sole trader or limited company take out contract hire?
• What happens if you need to end an agreement early?

Questions people ask

Do you own the vehicle at the end of contract hire?

No. The funder owns the vehicle for the whole agreement, and you return it at the end. If you want to own a vehicle outright, a different type of finance may suit you better.

Is contract hire the same as leasing?

The terms are often used interchangeably, but contract hire normally means a fixed-term rental with an agreed mileage and no obligation or option to buy. Always check the wording of the agreement you are offered.

Can I be sure of being accepted?

No. Each funder carries out its own checks on the business and decides whether to offer an agreement. A broker cannot promise acceptance.

What happens if I go over the agreed mileage?

You normally pay an excess mileage charge, at a rate set out in your agreement. Choosing a realistic mileage at the start helps avoid this.

Is contracthire.tv a lender?

No. Swiss Vans Ltd is a credit broker (FCA FRN 668283). We arrange contract hire with funders but do not lend money ourselves.