Contract Hire
What is CH?
With Contract Hire the business pays a small upfront amount to a dealer or lender that delivers the new car (with a full manufacturer warranty) to the business for a contract period of 2 to 4 years.
The business then pays a fixed monthly payment and at the end of the period the car is collected and can be replaced with another new car.
Contract hire is very popular with businesses because they can get a minimum of 50% and up to 100% refund on VAT.
Furthermore, the monthly payment is usually up to 60% cheaper than Hire Purchase or a Loan and if combined with a maintenance package most on-road costs are contained a fixed monthly payment.
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35 Months x
£230/mth
ex VAT
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£690 |
£8,741 |
Not Applicable |
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- There is no APR associated with Contract Hire/PCH
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The monthly price specified above includes :
- delivery of the vehicle from a main dealer and collection at the end of the period;
- road fund licence, full manufacturer warranty and breakdown cover; and,
- All routine servicing, maintenance and repair are available from your local franchised dealership
- The Deposit/Initial Payment is paid prior to delivery and in some cases a fee to secure the vehicle will be charged.
- Your monthly rental payment commences one month after delivery, and is paid by direct debit.
- Excess mileage fees will apply if you exceed the agreed mileage
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Representative Example*
Contract Purchase
What is CP?
Contract Purchase is similar to Contract Hire but the business has the option to buy the vehicle at the end of the finance period.
The business pays a small upfront amount to a dealer or lender that delivers the new car (with a full manufacturer warranty) to the business for a contract period of 2 to 5 years.
The business then pays a fixed monthly payment across the period at the end of which it will have the option to pay a balloon payment to take full ownership of the car.
Like PCH, the monthly payments for PCP are often much cheaper than hire purchase or a loan but provides the extra flexibility of ownership if the business requires it.
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35 Months x
£271/mth
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£812 |
£10,297 |
£6,575 |
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8.95% APR Representative
- Option to purchase fee £10
- There may be a credit arrangement and/or a completion fee to secure the finance. These are already reflected in the total payment shown above.
- Excess mileage charges apply if you exceed the agreed mileage and choose not to pay the optional balloon payment
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Representative Example*
Hire Purchase
What is HP?
If a business uses hire purchase to finance the purchase of a car, it is committing to buying the car outright via a secured loan that is paid back monthly across the period (usually between 3 – 5 years).
Monthly payments are therefore much higher than Contract Hire or Contract Purchase.
However, the business will not own the car until the final monthly payment is made at the end of the term because the lender retains ownership until then.
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35 Months x
£517/mth
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£1,060 |
£19,155 |
Not Applicable |
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8.48% APR Representative
- On the road cash price after FinanceAcar subsidy - £16,960
- Total amount of credit - £19,155
- Unlimited mileage
- Option to purchase fee £10
- There may be a credit arrangement and/or a completion fee to secure the finance. These are already reflected in the total payment shown above.
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Representative Example*
Bank Loan
What is Loan?
This is an unsecured loan (often called a personal loan).
An unsecured loan is when the loan attaches to business (not the car) and business owns the car from the date of purchase.
Lenders often have a limit of around £20,000 for unsecured loans (for applicants with a very good credit history).
If a business defaults on the loan the lender will pursue the business and then other assets directly.
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35 Months x
£536/mth
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Not Applicable |
£19,296 |
Not Applicable |
See more... |
9.9% APR Representative
- Loan amount - £16,608
- Credit arrangement fee: This may vary. Please ask on enquiry.
- Unlimited mileage.
- This is an unsecured loan taken by an individual or a company. Min/max period 12 – 60 months
- Maximum borrowings not to exceed £25,000 and amount lent will depend on credit status
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