Financing 101: What is Contract Hire?

If you want to finance one or several vehicles, commercial vehicle contract hire is the perfect solution for business owners who want truck or HGV finance without the burden of managing maintenance and servicing costs, or trying to forecast future market values.

In an increasingly competitive market, organisations are focused on streamlining costs in 2023. To help ease the financial burden associated with vehicle expenses, cost-effective options include operating leases, finance leases, contract hire and hire purchasing.

What is contract hire?

Contract hire offers businesses of all sizes an all-inclusive rental option that includes all the benefits of an operating lease combined with comprehensive maintenance packages. With a nominal upfront cost, organisations can enjoy reduced fixed monthly payments while gaining tax advantages, as rentals are considered business expenses. In addition, contracts provide minimal commitment and worry-free upkeep for maximum peace of mind at the end of each term agreement.

Contract hire gives you all the benefits of truck and HGV finance with none of the risks associated with maintenance and servicing

A contract hire agreement allows you to hire a commercial vehicle for an agreed term at a fixed monthly rate without taking on full ownership. At the start of your agreement, you can decide on the length of the agreement and predicted annual mileage to determine fixed monthly payments. You can more accurately budget and forecast with no nasty surprises, and the low initial outlay means your capital is protected.

Contract hire leasing agreements can be upgraded to suit your changing needs, while different maintenance packages can be chosen to ensure wear and tear is taken care of.

Contract hire benefits

  • Fixed monthly payments
  • Low capital outlay
  • Maintenance is included and not your responsibility
  • Ensures you have the latest vehicles (most efficient and tech)
  • Less capital outlay

What happens when the lease ends?

You can return the vehicle to the finance lender or negotiate an extension.

How to choose the right contract hire partner?

Because contract hire typically has fixed-price maintenance baked into the contract, it is important to ensure your leasing partner provides approved engineers for repair and maintenance and has a reputable track record in compliance management.

Experience in sourcing assets and an accurate understanding of residual value setting gives your provider the ability to lower the costs of your operating lease and offer a competitive advantage.

Asset Alliance Group has the expertise to handle any direct commercial vehicle contract hire requirement, no matter its size. Our industry-leading deals are premised on our comprehensive understanding of the sector and provide full maintenance options for a fixed monthly rate. End users benefit from having all service upkeep managed by us while they maintain access to their desired fleets with an agreed period usage — we take ownership at completion with no residual value risks incurred.

Find out more about our financing options