Van contract hire, is also called Vehicle Rental or van leasing, which is an agreement between a van owner and a van hirer, to rent the van for a period of time, usually between 2 - 4 years.
The cost of the rental per month is based on the projected mileage that the hirer thinks they will travel during a year. A starting point on a commercial vehicle mileage is usually 10k pa and can go as high as 50k pa, so as an example, if the Contract Hire period is 3 years at 10k pa, the total mileage would be 30,000 miles in total, if however the hirer travels more than the contract mileage, a mileage excess penalty agreed at the start of the agreement would be charged, this can be between 2p - 22p per mile.
The terms of the Van Contract Hire can include the provision of servicing, tyres and a replacement vehicle.
The van would be taxed for the duration of the Contract.
The hirer would be responsible for insuring the van fully comprehensive.
If the hirer takes the Contract Hire without a service package, they would be responsible for paying for the routine servicing and tyres that the van would require during the Contract Hire period. The servicing would be subject to the servicing scheduals shown in the service handbook, plus the Contract Hire company can stipulate where the van is serviced.
At the end of the Contract hire period, the van would be picked up by the Contract Hire company.
The hirer should be aware that if the van has any damage or parts missing, then the Contract Hire company will charge the hirer for the refurbishment of the van. It is usually better if the hirer gets any refurbishment work done, so that they have control of the costs, the hirer should photograph the van when it is cleaned and valeted prior to it being picked up by the Contract Hire companies agents, so that if there is any dispute regarding the condition of the van, photographic evidence is on hand
The rental costs on the van can be 100% offset against a business, because the van doesn\'t belong to the hirer, so it becomes a normal overhead to allow a business to function, plus if a business is VAT registered, then the Vat charged on the monthly payments can be claimed back.