Contract Hire is a rental agreement that allows you to drive a Volkswagen Commercial Vehicle without needing to own it. Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no disposal risk. You won’t own the vehicle and therefore won’t have the worry of ownership, you just have to hand it back at the end.
Once you have chosen your vehicle you need to decide on your initial rental, how many miles you drive each year, and how long you want to lease the vehicle for. These will be used to calculate your monthly payments.
You can also choose to include a level of servicing and maintenance into your monthly rental, keeping your vehicle in good condition.
Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.
As part of a Contract Hire agreement, you can include different levels of servicing, giving you one monthly payment for a vehicle and upkeep.
If you are leasing as a business customer, you may be able to claim back the tax on Contract Hire agreements.
As Contract Hire is a leasing agreement, you have no risk of the vehicle falling in value. You simply pay your monthly rentals and hand the vehicle back subject to fair, wear and tear and excess mileage.
As you simply hand the vehicle back at the end of each agreement, it means you are able to keep upgrading your vehicle for the newest model.
Contract Hire is a straightforward leasing agreement, which can help a range of people get into a new vehicle. It may be the best option for you if:
Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.
Can I get a Contract Hire agreement?
Contract Hire agreements are available for both personal and business customers. Contract Hire is not available to any customer intending to use the vehicle for hire and reward purposes*
*i.e. taxis, short term hire organisations, body-shop usage, driving schools or replacement vehicle insurance claim business.
What happens at the end of agreement?
Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no depreciation risk.
*This is subject to a 50% block where there is any element of private use of a motor car.
**The above note is intended as a summary of the principles of VAT and tax in this complex area. It is not intended to be and should not be construed as constituting tax advice and we make no representations, warranties or guarantees, whether express or implied, that the content is accurate, complete or up-to-date. Volkswagen Commercial Vehicle Financial Services (UK) Limited cannot be held liable in any way for any reliance upon this document, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, even if foreseeable. For specific tax advice relating to your particular set of circumstances, you should contact your own HMRC officer or your usual VAT / tax advisers.
What happens at the end of my agreement?
At the end of your agreement you will not own the vehicle as you are hiring it. You are required to pay any excess mileage or fair wear and tear fees you may have incurred and hand the vehicle back to Volkswagen Commercial Vehicle Financial Services.
Important information to consider
Hire Purchase is a straightforward way to pay for your Volkswagen Commercial Vehicle. You pay your deposit (which can be as little as one monthly payment), and then the balance is spread equally over one to five years helping you to select instalments that match your budget. At the end of the agreement, once you have made all the payments (including the option to purchase fee) you own your vehicle.
Once you have chosen your vehicle you just need to decide your deposit and how long you want to pay back the finance over. The amount left to finance is then divided equally over the length of your agreement to make up your monthly payments.
When you have made all repayments, and paid the option to purchase fee, you own the vehicle.
Hire Purchase is a simple agreement, once you have paid all the monthly payments the vehicle is yours to sell, trade in, or keep.
As you own the vehicle at the end of the agreement, there is no limit on how much you can drive the vehicle.
Hire Purchase is a straight forward way to buy a new or used vehicle without a large financial outlay up front. By breaking down the cost of the vehicle into monthly payments, it enables you to budget reliably over the next 3-5 years.
You determine how long you want to spread the finance over, and how much of a deposit you want to put down. This enables you to tailor the agreement to suit your situation.
The simplicity of Hire Purchase can help a range of people get into a new or used vehicle. It may be the best option for you if:
Own your vehicle
Once you’ve paid all your monthly payments and the option-to-purchase fee, the vehicle is yours to keep, or to use as part exchange for another vehicle.
There is no action required from you, we will automatically close the agreement after your final direct debit payment has been collected and send a clearance letter for your records.
Can I get a Hire Purchase agreement?
Hire Purchase agreements are available for both personal and business customers. Hire Purchase is available for Taxi usage (maximum 36 month term) but not available for other hire and reward purposes*
*Body shop usage, long term sub-let agreements (>1 month), replacement vehicle insurance claim business.
What benefits does Hire Purchase offer me?
*Subject to underwriting. 25% minimum deposit applies to new and used taxis. An offer of finance depends on certain conditions. Subject to status. Available to 18s and over in the UK only. Terms and conditions apply. Volkswagen Commercial Vehicle Financial Services.
What happens at the end of my agreement?
Yes once you have paid the final monthly repayment and option to purchase fee.
Solutions Personal Contract Plan allows you to make payments over a period of time, which may be a more flexible alternative to Hire Purchase. You can choose to put down a small sum initially and then defer a proportion of the vehicle’s value until the end of the agreement, which could reduce your payments and allows you to decide later whether you want to keep, return or exchange the vehicle for a new one.
You choose your initial payment (deposit), how many miles you will drive a year, and the length of your agreement.
This is used to work out your monthly payments and optional final payment, which gives you the ability to plan ahead with a fixed monthly outgoing.
At the end of your agreement you can then choose to:
By deferring a chunk of the amount you finance to the end of the contract, it means your monthly payments will be lower than if you spread the whole cost.
You don't have to decide what to do with the vehicle until the end of your contract, giving you the flexibility and protection needed to make the right choice for your circumstances.
We guarantee the final payment at the end of the contract as long as it comes back in the mileage and condition agreed. This protects you from any unexpected falls in the value of your vehicle and enables you to plan ahead with your finances.
The flexibility built into your agreement means you can keep upgrading your vehicle regularly. Great if you want to always stay in warranty, not have to deal with the long term ownership costs, or want the excitement of always driving the latest model.
At the end of a Solutions PCP agreement you have the choice of 3 options:
If you want to move into the latest model, or maybe try a different vehicle altogether, your Solutions PCP agreement enables you to part-exchange your current vehicle for a new one. You will need to settle your existing agreement and then apply for a new one with us (subject to application and acceptance).
If you would like to keep your current vehicle, you will need to pay your final balloon payment and option-to-purchase fee. These will both be collected automatically by Direct Debit, so you do not need to do anything.
Once your agreement has been settled we will automatically transfer ownership to you. The closing down period takes 10 days, after which time a letter will be sent to you to confirm that we no longer hold an interest in the vehicle.
Alternatively, if you wish to keep the vehicle but want to spread the cost of the final payment we can consider arranging to refinance the final (balloon) payment for you, subject to a new finance application.
If you no longer wish to keep the vehicle at the end of the agreement, you can return it to us. You will still need to pay all the monthly rentals and the option to purchase fee, and further charges may apply if you have exceeded your agreed mileage, or if there are any refurbishment costs following our inspection and collection process.
Volkswagen Financial Services will require a minimum of one months’ notice in order to arrange the vehicle collection so please contact us as soon as you know what option you want to take. Requests made after this date may result in a risk of you requiring additional Insurance, Road Tax or even an MOT, along with the possibility of the Direct Debit for the final (balloon) payment being taken.
Can I get a Solutions PCP agreement?
Solutions agreements are available for both personal and business customers. Solutions PCP is not available to customers intending to use the vehicle for hire and reward purposes*
*Long term sub-let agreements (> 1 month), taxis, couriers, contract hire and daily rental businesses, body-shop usage, or replacement vehicle insurance claim business, not available on Crafter. An offer of finance depends on certain conditions. Subject to status. Available to 18s and over in the UK only. Terms and conditions apply. Volkswagen Commercial Vehicle Financial Services.
What benefits does Solutions offer me?
Solutions PCP is ideal for customers who like the idea of changing their vehicles regularly, reducing the potential period of repayments, or simply want to leave their options open for a period of time.
You can own the vehicle once you have paid the optional final payment and option to purchase fee.
I am returning my vehicle, what happens next?
After you have informed us you wish to hand the vehicle back, our collection agents will contact you directly to arrange a convenient time for the Inspection and Collection of the vehicle via the contact details you have provided us with.
On the day of inspection please ensure that:
The inspector will record any damage (and cost of repair) or missing equipment/documentation and you’ll be asked to sign to confirm your acceptance of the report.
Lease Purchase is a purchase product suited to customers seeking long-term ownership, whilst looking to reduce their monthly repayments. Deferring an agreed amount to the end of your agreement allows you to reduce your monthly repayments. Deposits can be as little as one monthly payment.
Once you have chosen your vehicle, you need to work out how much you can afford as an initial payment, how long you want your agreement to be, and how many miles you drive each year.
This is then used to calculate your monthly payments and final balloon payment.
When your agreement comes to an end you need to pay the final balloon payment in order to keep the vehicle, or trade in your vehicle to contribute towards paying off the balloon payment.
Lease Purchase is different to Solutions PCP as your final payment is not optional, meaning you have less options at the end of your agreement.
When you have made all the repayments, including the final balloon payment at the end of the agreement, then the vehicle is yours to keep and continue enjoying.
By deferring a chunk of the amount you finance to the end of the contract, it means your monthly payments will be lower than if you spread the whole cost across the months.
As you can break down the cost of a new vehicle into manageable chunks you can plan with confidence for the next 3-5 years.
The balloon payment that comes as part of a Lease Purchase agreement suits certain lifestyles, It may be the best option for you if:
Need Help!
Contact one of the team to find out which of the above finance options best suits you.
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