Contract Hire and Leasing Explained

What is Contract Hire?

Contract hire – also known as car leasing – is an affordable and manageable way to drive a new vehicle. You agree to lease the vehicle for a set period – usually two, three or four years – but you don’t own it.

You’ll typically:

• Pay an initial rental (usually between three and nine monthly payments)

• Then make fixed monthly payments for the duration of the lease

At the end of the agreement, you simply return the car to the leasing company – with nothing more to pay, provided the vehicle is within the agreed mileage and in good condition.

What Are the Benefits of Car Leasing?

There are several benefits to business or personal leasing compared with other finance options like contract purchase or hire purchase.

Fixed Monthly Costs

Leasing allows you to fix many of your motoring costs. You know exactly what you’ll pay and when – making it easier to budget.

Tax Savings for Businesses

If you’re VAT-registered and choose business contract hire:

• You can reclaim 50% of the total payments made

• You can reclaim 100% of the cost of any maintenance package

• You can apply hire rental tax allowances

No Depreciation Risk

You don’t own the vehicle, so any depreciation is not your responsibility. At the end of the term, you return the car – no need to worry about resale value.

No Hassle Selling

There’s no need to sell or trade in the vehicle – simply hand it back at the end of your contract.

Stay in Warranty

You can drive a brand-new model every two or three years, meaning your car is always within the manufacturer warranty period.

Maintenance Options

Some lease deals allow you to add maintenance costs into your monthly payment. If anything goes wrong with the car, you're covered – avoiding large repair bills.

However, because most new cars come with a two- or three-year manufacturer warranty, it may not always be necessary to include a maintenance package. We’ll help you review the costs and decide what’s right for you.

Manufacturer warranties don’t cover everything. Wear and tear items – like tyres or batteries – are usually excluded. That’s why it’s important to understand exactly what is and isn’t covered in a maintenance package. Our team will talk you through this in detail.

Where Do the Cars Come From?

All of our vehicles come from our franchised dealer network, with full dealer and manufacturer backing. This ensures:

• Nationwide delivery across the UK mainland

• The reassurance of official sourcing and support

This is especially important when considering either business or personal leasing – and with Blue Chilli Car Leasing, you have complete peace of mind.

What Else Do I Need to Know?

There are a few key things to consider when leasing a vehicle:

Mileage Limits

Every lease comes with an agreed annual mileage limit. If you exceed this limit, additional charges will apply at the end of your contract.

We’ll help you choose a deal that reflects your real driving habits, so you don’t face unnecessary charges later.

Comprehensive Insurance

Because you don’t own the vehicle, you must have fully comprehensive insurance. Third-party cover won’t be enough – and any damage to the car could lead to extra charges when the vehicle is returned.

You’ll have no problem arranging insurance, but do bear in mind that premiums are sometimes slightly higher for leased vehicles – typically by £10–£15 per year. For most people, this is a small price for the benefits that leasing offers.

Missed Payments and Early Termination

If you miss a scheduled payment, or choose to end the lease early, you could face additional charges. Our friendly and professional team will explain all of this clearly before you sign anything, so there are no surprises.