What is the difference between flexible vehicle hire and long-term hire?
Flexible vehicle hire can be anything from 28 days through to 3 years. It is perfect if you are unsure of your business requirements and need the ability to reduce or expand you fleet with short notice. Long-term hire is usually based on a fixed 2 or 3-year period, with a cheaper rate.
Why should I hire a van, car or lorry instead of purchasing it?
Vehicle hiring offers flexibility in both car choice and duration of contract. Short term rentals are perfect for attending training days, business events or if a company vehicle is unexpectedly out of service. Long term rentals are typically periods more than 27 days and are designed for businesses who need a more permanent vehicle to suit their needs.
Hiring is an increasingly popular way of running a car for business usage. Owning a van or car can result in heavy value depreciation and unexpected repair costs, which are avoidable with vehicle hiring. The costs of the initial hire are usually lower than the deposit for a brand-new vehicle and the ongoing hire cost tends to be lower too.
Can I hire or lease a whole business fleet?
Yes, we can help you with that, whether you are looking for a fleet of vans or a collection of different cars.
Do hiring contracts include the vehicle tax (the Road Fund Licence)?
Hiring agreements normally include Road Fund Licence (more often known as vehicle tax or road tax) for the duration of the contract. The length of time that tax is covered will depend on the type of contract you have. For contract hire, the funder will provide vehicle tax for the duration of the agreement, as they will remain the registered owner of the vehicle.
Who is responsible for insuring the hired vehicle?
When you organise a flexible van or car hire, basic insurance can be included.
You may wish to opt in for extra cover, or organise this separately with a different insurer. As with all insurance, it pays to shop around for the best offers.
For example, the standard policy excess on business vehicle hire is typically £2,000 towards theft costs, regardless of who is to blame, and for repairs of damage as well. To avoid this expense, you can take out an Excess Reimbursement Insurance (ERI) policy which will pay back your policy excess after a claim has been completed.
Are there age restrictions when hiring a vehicle?
The general age requirements to hire a vehicle are from the age of 25-75, with a minimum of 2 years driving licence and a maximum of 6 points within the last 3 years. However, car hire suppliers may opt to add an additional daily fee for younger drivers instead, which is commonly known as a “Young Driver Fee”. Most suppliers require you to be at least 30 years of age to hire a luxury vehicle.
Is there a mileage limit for flexible vehicle hire?
The answer depends on the length of your hire agreement. There’s usually no mileage limit for short-term business vehicle hire, but there can be exceptions based on the vehicle type, location, and length of contract.
Contract business van hire, also called leasing, does involve milage limits as this affects the vehicle’s value after the lease ends.
Can I hire a business van with a car driving licence?
Yes, you can drive a van with a category B license as long as the maximum loaded weight of the van doesn’t exceed 3.5 tonnes.
Can I name multiple drivers for a flexible vehicle hire?
Normally there is no limit to the number of drivers that can use a flexible van or car hire, but there may be an extra fee for each additional driver.
Will I have to pass a credit check to hire a business vehicle?
The short answer is that any business hire company will want to be confident that you will make all your payments on time. If you already have a customer relationship with the company and a good track record of punctual payments, they may waive a formal credit check. If the company does not know you, of if you want to pay by debit card, then they are far more likely to check your credit history.
What level of wear and tear is usually allowed on hired vehicles?
If you are returning your vehicle at the end of your hiring agreement, you must do so with no more than ‘normal’ wear and tear. If your hired vehicle has more than ‘normal’ wear and tear, you will be liable to pay for the damages.
Each finance company provides its own guidelines as to what it considers ‘normal’ wear and tear, often linked to the age and mileage of the vehicle. Check this at the start of the rental to make sure you understand what is expected.
Are there any restrictions on driving a hired vehicle abroad?
This varies from one business vehicle hire company to another, so you will need to discuss your options before renting.
Why should I lease a van, car or lorry instead of purchasing it?
Leasing has always been a popular way of running a car for business usage. Owning a van or car can result in heavy value depreciation and unexpected repair costs, which are avoidable with vehicle leasing. The costs of the initial lease are usually lower than the deposit for a brand-new vehicle and the ongoing lease cost tends to be lower too.
Vehicle leasing means you can drive a new vehicle every few years, avoiding the need for MOT checks. You have manufacturers’ guarantees with all new vehicles. Road tax is covered for the duration of your contract. You don’t have to worry about selling a leased vehicle when you no longer need it, as you can just hand it back and pick another new leased vehicle.
Do leasing contracts include the vehicle tax (the Road Fund Licence)?
Leasing agreements normally include Road Fund Licence (otherwise known as vehicle tax) for the duration of the contract. The length of time that tax is covered will depend on the type of contract you have. For contract hire, the funder will provide vehicle tax for the duration of the agreement, as they will remain the registered owner of the vehicle.
Who is responsible for insuring the leased vehicle?
You are normally responsible for arranging your own insurance on any leased vehicle, although some providers offer deals that include this. The insurance you arrange must be a fully comprehensive insurance policy.
For business lease agreements, the insurance certificate should be in the company name or a director’s name. If an employee is required to drive the vehicle, a letter on company headed paper may be requested confirming that the employee is authorised to drive to vehicle and confirming his or her position in the company.
When organising insurance, remember that for business contract hire agreements, the finance company is the registered owner and keeper of the vehicle.
What happens if my leased vehicle is involved in an accident and is written off by the insurance company?
If your lease vehicle has been declared a ‘total loss’ – i.e. written off or stolen – you must inform the provider immediately. They will require written confirmation from your insurance company that the vehicle is a total loss before providing an amount for settlement of the vehicle contract. Your finance provider will not enter negotiations with your insurance company on your behalf, so you will have to take care of this yourself.
Do leased vehicles have a warranty?
Yes, just all leased vehicles come with the manufacturer’s warranty. The length of time this warranty covers will depend on the manufacturer, so you should check this before entering into a leasing agreement and of course check what is covered and what it excluded.
Your insurance broker should be able to help you organise protection to cover any possible shortfalls in the manufacturer warranty.
Will the mileage allowance affect the cost of my vehicle lease?
Mileage is one of the major factors in defining how much your leasing plan will cost. If you exceed your chosen mileage, you will be required to pay an extra amount, based on how many additional miles you have done. It is essential that you choose the right mileage allowance to reflect the driving rounds and needs of your employees.
Are there any restrictions to lease a vehicle?
Many leasing companies do not service businesses who wish to use the lease vehicle for “Hire and Reward” purposes. This includes Taxi, Chauffeur, Driving Schools and Rental companies. Some funders also please restrictions on customers who work in the Motor Trade.
Will a finance company check my credit history before letting me lease a business vehicle?
Yes. As part of the leasing application process, you will be asked to submit a finance application.
Most funders ask for a good to excellent credit score in order to be accepted for vehicle finance. No lender uses your credit score alone to approve or decline you for finance. Often many other factors come into play such as your ability to make regular payments on time and any other debts you may have.
Can a business be refused a vehicle lease?
Applying for vehicle finance is like applying for a credit card or loan. The finance companies will investigate your credit history before making a decision whether to accept your application.
On some occasions, finance providers may accept a guarantor, but this is dependent on the funder and is dealt with on a case-by-case basis.
Who is the registered owner and keeper of a leased vehicle?
For contract hire and personal contract hire agreements, the finance provider is the registered owner and keeper of the vehicle and will hold the V5C registration document for the duration of the contract.
How can I get my leased van or car repaired?
If you included a maintenance package in your vehicle leasing agreement, you will receive a maintenance contact number from the finance company. If your vehicle needs to be serviced or repaired, you should call that number to book your vehicle into a local approved garage. You may also be able to request free vehicle collection and delivery.
If you have not got a maintenance package and your vehicle needs repair, you must inform the relevant finance company of any incidents. If your vehicle is being serviced, you should go to a local main dealer and only use approved parts.
If my leased vehicle is unusable, can I get a replacement?
If your leasing contract included an optional relief vehicle, then this can be arranged by calling the finance company. You will need to check this is included in your agreement if you require this option.
What are Excess Mileage Charges on a leased vehicle?
As a car gets older, it depreciates in value and the more miles it has on the clock, the greater that depreciation. So when you take on a car lease, you’ve agreed to a set mileage allowance over the period of the lease, with a cost built into your monthly agreement – more the mileage the greater the cost. The annual mileage allowance is there so that the finance company funding your car lease can estimate a resale value on the car once the lease period is over.
What happens if I exceed the agreed mileage on my vehicle lease contract?
Any mileage over the agreed amount is charged at the excess mileage rate per mile specified in your lease. As an example, if the excess stated in your agreement is 5p per mile, and you exceeded your mileage allowance by 1,000 miles, you would be charged £50.
Can I renegotiate aspects of my vehicle lease?
Changes to your contract will be made at the discretion of the finance company that is providing the vehicle lease. They will be aware that even relatively short contract periods (two years, for example) can be enough for major changes in your circumstances.
Relocating your business or a change in the nature of your customers could mean you exceed your agreed mileage. Your financial situation could change so that you can no longer make payments (for example, bankruptcy or serious credit problems).
In any scenario, you should contact your finance company to find out what your available options are.
Can I transfer my vehicle lease to another company?
A transfer of contract is at the discretion of the finance provider and does not form any part of the customer terms and conditions or finance agreement. If your business is merged with another, is sold or undergoes other changes, there would normally be provisions in the vehicle lease regarding this.
Can I customise or modify my leased van or car?
If you require any additional accessories fitted to your vehicle, such as a tow bar, you should request this at the time your arrange your lease. Permission and restrictions will depend on the modification in question, manufacturer and finance provider.
Some small and reversible modifications may be permitted by the funder providing your leasing contract but this may invalidate the vehicle warranty, so always check first. You will also normally be expected to have any modifications removed without damaging the vehicle before returning it at the end of the contract.
What happens at the end of a vehicle leasing agreement?
Before the end of your contract, most leasing providers will contact you to discuss your replacement options. Depending on the type of contract taken, you may be able to hand the vehicle back, extend the contract, or purchase the vehicle from the finance company.
Who owns the vehicle at the end of a leasing agreement?
Whether you, your business or the finance company takes ownership of the vehicle at the end of the agreement will depend on the type of contract you have been given.
There are two types of business leasing agreements. If you have a ‘Contract hire’, the finance company owns the vehicle at the end of the leasing period. If you were given a ‘Contract purchase’ then either your business or the finance company will own the vehicle, depending on the details of your contract. With a ‘Finance lease’, the finance company owns the vehicle at the end of the lease. A ‘Lease purchase’ agreement means that your business owns the vehicle when the lease completes.
What level of wear and tear is usually allowed on leased vehicles?
If you are returning your vehicle at the end of your leasing agreement, you must do so with no more than ‘normal’ wear and tear. Each finance company provides its own guidelines as to what is acceptable wear and tear, based on the age and mileage of the vehicle. If your leased vehicles has more than ‘normal’ wear and tear, you will be liable to pay for the damages.
Can I terminate a vehicle leasing agreement early?
Early termination is at the discretion of the finance provider and is not available on all contracts. If you wish to terminate your agreement early, you should speak to the provider of your leased vehicle to discuss your options.
Are there any restrictions on driving a leased vehicle abroad?
Depending on the finance provider, you may be allowed to take a leased vehicle abroad for a specified period of time. Before arranging your trip, you will need to contact the finance provider to discuss your options. Along with the standard documentation, leased vehicle drivers will require a form VE103B. This is essentially authorisation from the finance provider which allows the driver to take the lease or hire car abroad. This is a legal document and acts as an alternative to the V5C. This form must be ordered in advance of your trip.
Is it possible to change a lease mid contract to another make or model?
It may be possible to change to another vehicle with some leasing providers, by settling your current contract. An early termination settlement figure can be anything from half to all of the outstanding rental amount, though this calculation will vary from funder to funder. You should contact your leasing providers to obtain a settlement figure so you can evaluate your options and discuss your next vehicle.