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Contract Hire – A Great of Way to Finance Your Car

In this present age of technology, the term contract hire has become the ‘buzz’ of the day in terms of financing a car. Now, what is a contract hire? It is a contract by which an individual or business house hires one or more cars on the basis fixed and affordable rental schemes. This is an excellent and cost effective method for financing cars and has become very popular in the current market scenario.In view of the above, cars pursued by way of contract hire come with a three year warranty period, being offered directly by the manufacturer. This is really advantageous in the sense that business houses or individuals do not have to spend a huge sum of money to purchase a car; thus cash flow and liquidity is enhanced. Now corporate houses and individuals can use this sum for better purposes such as business development or for enhancing savings and investments, as cars are now easily hired through cost effective contract hire schemes.Once you opt for a contract hire scheme, you would have to pay fixed and affordable monthly rentals for the entire contract period. This in turn limits your financial burdens of maintaining the car lifelong. The contract hire scheme takes care of the wear and tear and other forms of maintenance that is required to be done in the course of usage of the car. Secondly, if you’re a business personnel, hired cars do not show up on the balance sheet and this affects profit gearing ratios. Apart from this what every one of us hates, is untiring paper work that is usual a part of any deal. But in the contract hire system, the paperwork is fast and easy and can be met via fax or post. One of the biggest advantages is that the payments and monthly installments are really low and the contract takes care of all the headaches of after sales including maintenance and road tax throughout the entire time frame of the contract.Now, a bit of information on the contract hire system and its funding methodology. It is a funding system that has been specially designed so that registered VAT (Value added Tax) customers are benefited, not to leave out those who aren’t VAT registered. The contract is usually for 12 to 18 months for cars that are pre-registered and in case of newly branded vehicles it is 18 to 60 months. In terms of mileage, the allowable limit stands at 160,000 miles. What is important here is that the customer bears the insurance aspect of the contract. Maintenance costs, expenses related to wear and tear of the car, servicing charges would all be included in the insurance contract. A termination charge is levied on either of the parties, if they terminate the contract before time; this sums up to around 50% of the monthly payable balance. In this regard any expense relating to damage of the car is to be borne by either of the parties in case the contract is terminated before schedule.