Business Contract Hire fact sheet (V8 05/01/2026)
Business Contract Hire (BCH) is a long‑term leasing product that enables businesses to run new vehicles without tying up capital or taking on ownership risk.
BCH provides predictable motoring costs by spreading vehicle use over fixed monthly rentals, making budgeting easier for businesses of all sizes.
It removes the burden of depreciation risk, resale responsibility and large upfront payments typically associated with outright purchase.
The finance company purchases the vehicle and is the legal owner throughout the agreement.
Your business leases the vehicle for a fixed period (24–60 months). Some funders allow bespoke terms in one‑month increments such as 30, 36, 42 or 54 months.
You choose an annual mileage allowance. Higher mileage usually leads to higher rentals due to depreciation impacts.
Monthly rentals are influenced by vehicle list price, negotiated discounts, residual value forecasts, mileage, term length, and optional maintenance.
VAT‑registered companies may reclaim 50% of VAT on finance rentals and 100% of VAT on maintenance (if taken). Commercial vehicle rentals may have different VAT rules.
Use of a brand‑new vehicle to UK specification, sourced via franchised dealerships.
Road Fund Licence (RFL) for the full contract term (unless tax legislation changes).
Optional funder‑maintained packages covering servicing, repairs, tyres, breakdown cover, MOTs (if applicable) and sometimes collection/delivery for servicing.
Customer‑maintained agreements require the business to cover all servicing, mechanical repairs, tyres and MOT’s.
Insurance is not included; however, insured lease products may be available via some funders.
At the end of the agreement, you return the vehicle to the funder, subject to BVRLA Fair Wear & Tear guidelines.
Mileage is checked against the contracted allowance, excess mileage will be charged at a pence‑per‑mile rate specified at the start of the contract.
You may be offered a contract extension (fixed or rolling), although rental amounts may change depending on funder policy.
You may upgrade to a new vehicle and continue leasing without handling resale or disposal.
Brokers compare rates across multiple leasing companies to secure competitive rentals.
They source vehicles with dealer discounts that individual businesses may not access directly.
Brokers guide you through credit applications, documentation, order placement, delivery tracking and mid‑term contract changes.
They assist with end‑of‑contract guidance including returns, inspections, excess mileage management and extensions.
Accurate budgeting through fixed monthly rentals.
No exposure to residual value risk – the funder bears depreciation losses.
Ability to choose lower or higher initial rentals depending on cashflow.
Maintenance packages can smooth running costs and avoid unexpected bills.
Easy fleet refresh cycles - replacing vehicles every few years keeps running costs low and reduces downtime.
Mileage changes may be possible mid‑contract, helping businesses adapt to operational changes.
Early termination charges can be significant, often equivalent to 50% of remaining rentals.
Excess mileage charges apply if the contracted mileage is exceeded.
No ownership at the end – this product is purely rental‑based.
Damage beyond the BVRLA Fair Wear & Tear standards will be chargeable.
Vehicle customisations may be limited depending on the funder’s policies.
Limited Companies, PLCs, LLPs, Partnerships, Sole Traders and Charities.
Businesses seeking predictable running costs and minimal administrative burden.
Companies that wish to refresh fleet vehicles regularly without tying up capital.