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Features of Personal Contract Hire:
- A Hiring Agreement where the vehicle remains the property of the Finance Company.
- The vehicle is disposed of by the Finance Company at the end of the contract.
- The contract is set for a period usually between 1 & 2 years.
- The contract is for a set mileage usually for a maximum mileage of 100,000 petrol engines & 120,000 diesel engines.
The customer pays a fixed monthly rental which will always include:
- Cost of vehicle funding.
- Cost of vehicle depreciation.
- Road Fund License.
For an additional Rental the customer can include the following options:-
- All Maintainance, Service, Repairs, Tyres and Batteries.*
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- Relief Vehicle provision.
- Recovery service.
- Motor Club Membership.
*Accidental damage, driver abuse and glass breakage's are normally excluded.
Advantages
- Fixed cost motoring:
The Customer only has to bear the direct costs for fuel and vehicle insurance, plus Excess Mileage charges if the vehicle exceeds the Terminal Mileage figure.
- Reduced Administration.
- No responsibility for vehicle disposal.
- Low initial outlay.
- Low monthly outlay.
- Finance charged on VAT exclusive price of new and qualifying cars.
Disadvantages
- No equity on the vehicle at the end of the contract.
- VAT on rentals, only 50% of which is reclaimable.
- Vehicles do not appear on the balance sheet.
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