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What is Contract Hire?

Home > Car leasing > What is Contract Hire

Contract Hire is a popular type of vehicle leasing that’s a simple way for you to get behind the wheel of a brand new vehicle. You’ll spread the cost and always know what your monthly payment will be. Plus you avoid the significant upfront investment that comes with buying a vehicle outright.

Contract hire is flexible – you’ll be able to choose from a vast range of cars and vans, with a contract length and mileage to suit your needs. Additional products like maintenance packages and insurance can also be built into your monthly payment.

Here’s a rundown of some of the most commonly asked questions about contract hire and how you could get your hands on your next brand new vehicle.

What is contract hire infographic

How does contract hire work?

You choose a car or van, how long you’d like to keep it, and how many miles you’re expecting to do in it each year.

Decide if you’d like any optional extras, such as heated seats or sat nav, and how much you’d like to pay upfront. A typical up-front payment is equivalent to six months’ rental, but this can be reduced, or increased as required. All of this information is used to calculate the monthly cost to you of leasing the vehicle. That’s the cost that you’ll then pay each month over the duration of the contract. Once the contract’s over, as long as the vehicle’s in good condition and within the mileage limit, you simply hand it back.

We have a great selection of car lease offers to help you choose.


How long can I lease a vehicle for?

Contract hire gives you the option to lease a vehicle for a fixed period of time, which is usually two, three or four years.

If you are looking for a shorter lease period, there are two other products available. Short-Term Rental allows current customers to hire a vehicle between one and 28 days. Mid-Term Rental can help business customers who need a vehicle for a little bit longer, between one and 24 months. Mid Term Rental gives you the flexibility to change your contract period at any point, should your needs or circumstances change.


What is the cost of contract hire?

This depends on a number of factors, including the make and model of the vehicle you choose, the contract length and the mileage you opt for. The lower the mileage over the term of the agreement, the lower the monthly payment. You’ll need to make an upfront payment followed by fixed monthly payments over the length of the contract. The higher the upfront payment, the lower the monthly rental.

What mileage can I choose?

It’s up to you – although annual mileage options go from a minimum of 5,000 to a maximum of 50,000 miles per year.

We understand that it’s hard to predict what might be around the corner, and that our customers’ driving needs can change over the period of their lease. That’s why we are happy to talk through your options at any point in your contract should you need to renegotiate your mileage. You might even be able to take advantage of a cheaper monthly payment if you’re doing less miles than you thought.

Just contact us and we’ll take care of the rest.

What is included in the monthly payments?

This is largely down to the contract and products you choose at the start of your lease.

With Arval, there are several different combinations to choose from. If you’re looking for a more basic package and are happy to source servicing, maintenance and insurance yourself, Arval Economy could suit you best. If you’d like the peace of mind of one fixed monthly payment for all of your motoring needs, then Arval Total Care could be the product for you.

Road tax is included in the monthly payment for all of our options, so that’s one less thing to worry about.


What additional services are available with contract hire?

You can add maintenance and breakdown, along with insurance, to the monthly lease cost. Doing this will give you even greater certainty around your vehicle costs.

What vehicles can I choose?

There is a huge selection of cars and vans available, and because you’re spreading the leasing payments over a period of time, you might have more options than you think. You’ll have the opportunity to drive a brand new vehicle, built to your specification, which you might not be able to afford to buy outright.


Will I own the vehicle?

No., it’s owned by the finance company that arranges your contract hire – this could be us.


What happens at the end of the contract?

You simply return the vehicle. When our team come to collect it, it’ll be inspected for any damage or issues. Providing you return it within the terms of your contract and without damage, there won’t be any hidden surprises. We take on the risk of depreciation and deal with selling the vehicle on. You just have to decide what to do for your next vehicle. Of course if you love the vehicle you’re in, you can always extend the length of your lease.

What is business contract hire?

Business Contract Hire lets businesses finance their vehicles in exactly the same way as described above - over a fixed period of time, with an initial payment, agreed mileage and subsequent fixed monthly payments over the duration of the contract. It’s subject to VAT, which may be partly reclaimable depending on your businesses VAT position.


What is Personal Contract Hire?

Personal Contract Hire works in the same way as business contract hire, but the contract is between the leasing company and the individual. The only other difference is that VAT isn’t reclaimable.

Why should I choose contract hire from Arval?

There are many reasons to choose Arval. We’re one of the UK’s leading vehicle leasing providers with over 40 years’ experience. In the UK, we fund more than 160,000 vehicles and buy approximately 45,000 every year, giving us great buying power to help provide great deals for our customers. With dedicated Account Managers, a 24/7 driver contact centre and a wide range of award-winning products and services, some of which are unique to our business, we can help take the hassle away whether you need one or 1,000 vehicles.

We offer pretty much any make or model of vehicle currently on the market, covering cars and vans of all sizes and to suit a range of budgets. Plus, we’re owned by BNP Paribas, one of the world’s best rated banks.