Contract hire and leasing at a glance

Whether you're a business customer or a private buyer, here we cover the contract hire & leasing basics.

• Contract hire

  A vehicle is leased for a set amount of time, for a set monthly fee and an agreed mileage. Maintenance and servicing is often included and the car is handed back at the end of the lease.

• Who typically contract hires?

  Contract hire is very popular with sole traders and small businesses and company car drivers who are used to a minimum amount of hassle.

• Leasing

  Unlike contract hire, the responsibility of the car's upkeep - servicing and so on - is with the driver, or his/her company. The car also may be bought at the end of the lease.

• Do companies get financial benefits?

  There are advantages for VAT-registered companies, who can reclaim 50% of the VAT on a contract hire deal and 100% of the VAT on a maintenance deal.

• What are Personal Contract Hire (PCH) and Personal Contract Purchase (PCP)?

  They are the names of the main contract hire and lease options available for private individuals.

• What about insurance?

  Insurance is always the responsibility of the driver.

• Who typically leases?

  Leasing is more popular with private individuals who like the security of paying fixed monthly rates, but are happy to maintain the car themselves.

• How long are the contracts?

  Most contract hire and leasing plans are for two to four years.

• Want to know more?

  Everything you need to know about contract hire and leasing is in our feature '10 things you should know.'