Business Contract Hire Explained

What is business contract hire (BCH)?

Business Contract Hire (also known as BCH for short) is a vehicle agreement between a registered business and a finance company. It is suitable for business owners, sole traders, partnerships, and limited companies. With a business contract hire contract, you decide on which vehicle you’d like to lease, then agree to an initial rental and annual mileage amount, and how long you want to lease the vehicle for, typically 24, 36, or 48 months. Your business will then undergo a car lease credit check to see if you are financially eligible. The key difference between personal and business leasing is that with a business lease, you’re leasing it on the behalf of a business, rather than solely for your personal use. The company will never own the vehicle. They have sole use of it for the duration of their contract however, they need to keep in mind that it is the property of the finance company. Business contract hire allows you to claim 100% of the VAT if the vehicle is used solely for business purposes, and up to 50% if it’s used for some personal use.

Who can apply for a business lease?

Most businesses can take a business lease, including partnerships, sole traders, limited liability, and public limited companies and charities. In addition to a credit check, you need to be trading and be able to demonstrate suitable income and or profit levels. Finance providers use the credit check information and details on your application to make a final decision. A good credit report is not the sole factor in being eligible for business leasing but can play a part in your chances of getting accepted for a business lease contract. Finance companies typically prefer businesses to have a minimum of 3yrs trading accounts. However, if your business is less than 2yrs old the finance company may still consider providing finance. You may be asked to provide additional information to allow the finance company to make an informed lending decision. You may be asked to provide 3 months’ business bank account statements, a director guarantee (if you are a limited company), and management accounts if these are available. This allows the funder to gain a greater insight into the business and the potential associated lending risks involved. 

Get in touch today to apply for a new vehicle on business contract hire customerservice@trioleasing.co.uk or 01283 907100