Go Lease How Leasing Works

What Is Car Leasing?

Leasing is a long-term rental agreement offering the exclusive use of a car or van for a set period of time at a fixed monthly price. It offers an alternative, and often cheaper, funding solution to buying a new car or van with a bank loan.

Car leasing helps you avoid any unexpected costs by offering a fixed monthly payment for the term of the lease. The customer also doesn't have to worry about depreciation or selling the car as this job falls to the lease company.

Business Contract Hire

Contract Hire is a vehicle leasing contract for sole traders, partnerships, limited companies and PLCs.

Contract Hire is essentially the long lease of a vehicle for a pre-determined length of time, usually between 18 months and 48 months. The hirer will pay a single, fixed amount each month and is only required to pay a low initial deposit; typically equivalent to 3-6 months rental. The monthly payments are inclusive of Road Fund Licence and, if required, service and maintenance of the vehicle. An annual mileage allowance is agreed at the beginning of the contract. If the mileage allowance is not exceeded at the end of the contract, the vehicle is handed back with no final and/or balloon payments. If the mileage is exceeded, the hirer will pay an excess mileage charge. The mileage charge will be calculated in relation to an amount charged per mile (agreed at the start of the contract) above the allowance.

Benefits of Contract Hire:

• VAT registered companies may reclaim up to 100% of the VAT on the rentals (50% if the vehicle is also used for personal use);
• The inclusion of servicing and maintenance in the rental, spreads the cost of upkeep and means the hirer does not incur the unexpected expenses of running a vehicle;
• Monthly rental means no up-front cost and keeps capital free for other investments;
• Fixed monthly rentals makes budgeting easier;
• Off balance sheet funding;
• No depreciation risks as the responsibility for the vehicle, at the end of the contract, rests with the lender.

Personal Contract Hire

Personal Contract Hire is a vehicle leasing contract specifically designed for personal use.

Personal Contract Hire is essentially the long lease of a vehicle for a pre-determined length of time, usually between 18 months and 48 months. The hirer will pay a single fixed amount each month and is only required to pay a low initial deposit, typically equivalent to 3-6 months rental. The monthly payments are inclusive of Road Fund Licence and, if required, service and maintenance of the vehicle. An annual mileage allowance is agreed at the beginning of the contract. If the mileage allowance is not exceeded at the end of the contract, the vehicle is handed back with no final and/or balloon payments. If the mileage is exceeded, the hirer will pay an excess mileage charge. The mileage charge will be calculated in relation to an amount charged per mile (agreed at the start of the contract) above the allowance.