Contract Hire has predominantly been available to the VAT registered business customer but it can offer you some advantages over other funding methods depending on your personal circumstances. It is essential that you fully understands exactly what Contract Hire can do for you and what your responsibilities are under the terms and conditions.
Definition
Contract Hire is a "simple rental agreement" where you hire a vehicle for a fixed term at an agreed contract mileage and simply return the car at the end of the period (subject to vehicle condition). You can never own the vehicle as that remains with SEAT Finance
VAT
VAT at 20% is included in every rental and, if not VAT registered, you will not be able to reclaim any element of VAT.
Service and Maintenance
The vehicle must be serviced at the manufacturer's recommended intervals by an authorised SEAT dealer and you are responsible for any damage other than that incurred through reasonable, fair wear & tear.
Vehicle Condition - Fair, Wear & Tear
You will receive a "Welcome" pack and a "fair, wear & tear" guide that details the conditions regarding the return of the vehicle at the end of the agreement.
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End of Contract
At the end of the Contract Hire agreement you simply return the car to SEAT Finance, subject to mileage and the condition of the vehicle being in "good repair and condition", taking into account "fair, wear & tear". If you have exceeded the contract mileage you are liable to pay excess mileage charges for mileage covered over the agreed contract mileage, and if the vehicle is not deemed to be in the appropriate condition you will be charged to bring it to that standard. SEAT Finance will write to you 6 months before the end of contract date to remind you of the process.
Early Settlement
You can decide to end the Contract Hire agreement early, however in this case, you will be liable to pay all the outstanding rentals, less a small rebate.
Summary
Contract Hire takes away the potential costs of ownership but does require you to return the vehicle in "good repair and condition" at the end. Reconditioning costs could be substantial if you have failed to look after the vehicle whilst in your possession. You can not own the vehicle at the end of the contract period, and early settlement is relatively expensive.
