Get ownership of a new car with contract hire

All about contract hire

13:22 09 October 2014

If you know your car’s mileage and don’t want to be facing the challenges associated with car ownership, then consider trying contract hire.

 

In contract hire, you pay cash monthly in exchange for borrowing the car. However, you cannot use the vehicle once the payment stops because the company has full ownership.

 

Which car can I borrow?

 

The model of car to be given depends on the credit history. If your history is clean, then the contract hire company can give you can an expensive car at a lower price compared to other car finance options.

 

What is the cost?

 

The beauty about contract hire is that you pay a standardised amount of money for the agreed time limit. However, the miles travelled and the condition of the vehicle upon return determines the final cost. The cost of the vehicle, and its value at the end of the hire period are also significant factors that determine the final cost.

 

What are the benefits?

 

The benefits you may get from one dealer are different from what may be offered by another dealer so take time to compare the deals. Some companies may service and maintain the car every month and what you need to take care of is just insurance fees and fuel expenses. Nonetheless, most companies have fixed allowances on mileage. You may have to pay for any excess miles driven. 

 

What is the consequence of stopping payments?

 

The contract requires you to make continuous payments up to the end of the specified period. If you return the vehicle before the end of that period, you are still expected to clear the payments till the period expires. However, you can extend the contract to cut the monthly payment although this could be more costly. Those who engage in the leasing period must therefore be willing to agree to the given terms and conditions.