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Business Contract Hire Explained

Photo of Donna By Donna
22nd December 2022

Business Contract Hire Explained

How Business Contract Hire rentals are calculated

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Cost of the vehicle

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Contract term

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Initial rental

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Annual mileage

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Anticipated residual value

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Additional contract options

What type of company are you?

How many years have you been trading for?

How many years have you been trading for?

Businesses trading for under two years may find it difficult to obtain vehicle finance. This is because it is difficult for the finance provider to objectively gain insight into the business and the potential lending risks involved. New businesses may be required to submit 3 months business bank statements, management accounts (if available) and a director's guarantee (ltd companies only) to support your finance application. In some cases, a larger initial rental may also be required.

Would you consider a personal finance application?

Has your company ever been declined for finance?

Has your company ever been declined for finance?

Would you be willing to provide a Directors Guarantee?

Good News!

You are likely to be eligible for business finance based on the details you provided.

What would you like to do next?

We're sorry, but you are not currently eligible for business finance

Lenders may require more detail on some of the answers you provided before you will be eligible for finance.

Please call us on 0345 811 9595 to discuss your finance options

Contract Hire is the UK's most popular type of vehicle leasing. For businesses, it is a low-cost way to acquire a new car or van that avoids the risks and administrative burden of ownership.

David Johnson
Director - Nationwide Vehicle Contracts

Business Contract Hire (BCH)

Business Contract Purchase (BCP)

Finance Lease (FL)

Fixed monthly rentals

Y

Y

Y

Low initial outlay

Y

N

Y

Ownership of vehicle

N

Y

N

Tax Benefits

Monthly rentals may be offset against taxable profits*

Businesses might be able to claim tax relief on the interest charged across the period of the hire purchase contract*

Monthly rentals may be offset against taxable profits*

VAT

Y - 50% of vehicle rentals (private use) or 100% of vehicle rentals (business use) for VAT registered companies*. 100% on maintenance costs

N - For commercial vehicles, you will pay VAT upfront but can claim back 100% if VAT registered*

Y - 100% of vehicle rentals for commercial vehicles for VAT registered companies*

Inclusive road tax

Y

N – First 12 months only

N

End of contract

Hand vehicle back

Pay balloon payment or hand vehicle back

Sell vehicle to third party and pay funder outstanding balance

Maintenance

Optional

Optional

N

Mileage charges

Possible if exceeded

N/A if keeping vehicle

N/A

Damage charges

Possible depending on condition

N/A if keeping vehicle

N/A

Return flexibility

Fixed term – early term can be expensive

Fixed term – early term can be expensive

Fixed term – early term can be expensive

Case Study 1

man smiling sat in car

Case Study 2

delivery driver sat in van

Business leasing deals

Hot Deal
24 plate
Model version 2024
FREE METALLIC PAINT
Citroen C3 Hatchback 1.2 PureTech 110 Plus EAT6 *Free Metallic Paint*

Citroen C3 Hatchback

1.2 PureTech 110 Plus EAT6 *Free Metallic Paint*

From

£138.98

Business price
per month Excl VAT

Personal Leasing £166.77 Incl VAT

Initial Rental £833.88 Excl VAT
Processing Fee: £250.00 Excl VAT
Subject to status and conditions
Hot Deal
UP TO 47.9 MPG*
Model version 2025
FREE METALLIC PAINT
Hyundai Tucson 1.6T Hybrid N Line S Auto *Free Metallic Paint*

Hyundai Tucson

1.6T Hybrid N Line S Auto *Free Metallic Paint*

From

£265.33

Business price
per month Excl VAT

Personal Leasing £318.40 Incl VAT

Initial Rental £1,591.98 Excl VAT
Processing Fee: £250.00 Excl VAT
Subject to status and conditions
Hot Deal
UP TO 54.3 MPG*
Model version 2024
FREE METALLIC PAINT
Nissan Qashqai 1.5 E-Power Acenta Premium Auto

Nissan Qashqai

1.5 E-Power Acenta Premium Auto

From

£201.68

Business price
per month Excl VAT

Personal Leasing £242.02 Incl VAT

Initial Rental £1,210.08 Excl VAT
Processing Fee: £250.00 Excl VAT
Subject to status and conditions
Hot Deal
UP TO 48.7 MPG*
Model version 2024
INCL METALLIC PAINT
Nissan Juke 1.0 DiG-T N-Connecta *Incl. Metallic Paint*

Nissan Juke

1.0 DiG-T N-Connecta *Incl. Metallic Paint*

From

£173.54

Business price
per month Excl VAT

Personal Leasing £208.25 Incl VAT

Initial Rental £1,041.24 Excl VAT
Processing Fee: £250.00 Excl VAT
Subject to status and conditions

Guide Information

Photo of Donna

About the Author: Donna Kelly

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