Mercedes-Benz Contract Hire
The contract hire option is available to those people who want to hire a vehicle for a certain amount of time and are happy to pay a fixed rental fee. This fee is based upon the projected mileage of the customer over the term of the hire.
So, in effect, the more miles that are accrued, the more expensive the rental fee will become and vice versa in that the less miles projected, the cheaper the rental fee. In terms of the actual contract there are two options. The first being for car hire only with no maintenance assistance. The second option being that maintenance is included. Once the contract terms are completed, the vehicle is then returned to the lending company / dealership.
This particular type of funding option can be popular with businesses where a proportion of the monthly rental can be offset against taxable profits. As each rental attracts VAT, this gives the added benefit that an element of VAT can be reclaimed by a VAT Registered company. Vehicle usage and the vehicle type are factors in determining what level of VAT can be reclaimed. If a vehicle is partially used for private use, only 50% of the VAT is recoverable. However, vehicle service and maintenance are fully recoverable. Vehicles under contract hire are not recorded as assets on a company's balance sheet.
