SHORT TERM NON-MAINTENANCE CONTRACT HIRE (18 months or less)
Contract hire is a popular choice as it is both cost-effective and easy to manage. alliance has led the market in arranging short term contract hire packages. The term contract hire means agreeing to take control of a car for a fixed period – it’s yours to drive but it is never actually yours to own. Instead you reach an agreement with alliance to make fixed payments (usually monthly) for the duration of the contractual period. At the end of the contract you return the car to alliance.
Contract hire offers fixed-cost motoring – you know exactly what you will have to pay and when you have to pay it, helping you to budget. However, what if you require a car to solve a short-term problem – perhaps just for a few days, or a few months. In these instances, daily rental is a product to suit such circumstances.
Short-term contract hire fills the void in the market between daily rentals and traditional car leasing. The average length of a short-term contract hire deal is three-12 months, though alliance can offer rolling contracts for as little as 28 days.
You will make payments (usually monthly) based on the difference between the value of the car at the start of the term (its retail value) and the value of the car at the end of the term (its residual value). You will also be asked to stick to a strict mileage limit which will be used by alliance to determine the residual value. If you exceed the mileage limit you are likely to be penalised as this will affect the vehicle’s depreciation.
At the end of the short-term period, you simply return the vehicle to alliance and walk away. There is no option to buy the vehicle although if you choose, you could take out another short-term contract hire deal.
Maintenance of the vehicle is not generally included.
What are the pros and cons of short-term contract hire?
• Your short term needs are met using new vehicles requiring little maintenance
• You can change vehicles frequently to meet differing needs
• Fixed cost motoring – Short-term contract hire allows you to budget for the period of each hire knowing exactly what your monthly outgoings will be.
• Road Fund Licence –incorporated into the agreement.
The downsides to short-term car leasing are the costs. Though it will generally be more cost-effective to take out a short-term car lease than a long-term daily rental, the fact is that most new cars depreciate most rapidly during their first twelve months – the length of a typical short-term contract. Therefore, payments are unlikely to be as cost-effective as long-term deals. Finally, it is important to consider that both short term contract hire and long term are currently considered as off balance sheet funding.
What is meant by off balance sheet funding?
Depending on the nature of your business, ultimate ownership of your asset on your balance sheet may not be very important.
Businesses which already have significant assets on their books may not want to unnecessarily add to their asset base. Publicly listed companies with shareholders to please may actively try to keep the asset off the balance sheet because this will enhance their return on capital employed (ROCE). Finance products such as Operating Leases or Contract Hire allow companies (subject to their auditors' approval) to keep the vehicles off the balance sheet, at the same time improving their financial gearing because the leased asset will not count as interest bearing debt.
Can I recover the VAT on short or long term contract hire?
The VAT on contract hire rentals is recoverable - subject to Article 7 (2) (A) of the VAT (Input Tax) Order 1992 (as amended).
If the vehicle is used for private use the customer can usually reclaim 100% of the VAT on the servicing element and 50% on the finance element of the contract. The majority of alliance contracts are based on non-maintenance packages therefore the rental quoted is considered as all assigned to the finance element.
Will we pay for delivery and collection?
NO – delivery and collection is included in alliance quoted rates.
Will alliance need to see copies of driving licences?
Your order(s) will be given to an underwriter who will ask to see proof of identification. If you have a new UK photo card licence you must also produce the paper counterpart.
How soon can alliance deliver?
It takes approximately 21 days to arrange a short term contract hire due to the processing of the application and arranging delivery. If you see your business possibly needing this option in the future then lead times can be shortened if a credit line is already in place. Speak to alliance about arranging a credit line.
Is Road Fund Licence (RFL) included?
YES. If the RFL expires whilst you are still in possession of the vehicle we will contact you.
Are the vehicles new?
Vehicles booked via our short term contract hire department will be new or pre-registered.
Can I contract hire the car on my own insurance?
A valid insurance certificate needs to be provided when we open your account.
Is there a mileage restriction on the vehicle?
There is a mileage restriction on a short term contract hire booking which will be specified when a quote is provided. If a vehicle exceeds the contracted mileage then an additional pence per mile charge is levied which varies dependant on make/model.
Can I fit a tow bar?
The hirer may request permission from alliance to fit a tow bar.
Are contract hire vehicles supplied with floor mats?
Mats are not supplied although we would recommend the addition of basic rubber floor mates in order to protect the carpet from heavy staining.
Can I take the contract hire vehicle abroad?
We can allow our vehicles abroad and we would supply all the relevant paperwork to cover the vehicle abroad. However there is an extra surcharge for taking the vehicle out of the country. Please contact us for further information.
Can a contract hire vehicle be sign written?
We would recommend sign writing a contract hire vehicle with vinyl graphics. However, it is important to please ensure that vinyl graphics are removed prior to collection.
I have ordered via alliance but the delivery came from another supplier?
We utilize our own fleet and also occasionally the fleets from reputable suppliers who may have a vehicle that meets your needs specifically or who can deliver within your timeframe. Howsoever the vehicle is sourced it is only alliance that can collect any rental and only alliance that can off-hire.
What is your fuel policy?
All vehicles are provided on an empty to empty basis. We provide the vehicle with a minimal amount of fuel, allowing you to gauge for yourself how much you need to use. This means that there are no fuel deposits or additional costs to pay on returning the vehicle.
Who services the vehicle?
All vehicles are to be serviced as per manufacturer service intervals. Vehicles are also fully valeted before each rental commences to ensure that you receive your contract hire vehicle in excellent condition with an up to date service record. If your mileage is unexpectedly exceptionally high during the term of the contract then please notify alliance.
What do we do if the tax disc is lost or stolen?
Contact alliance who will arrange a replacement.
What do we do if we have mechanical problems/accident with the contract hire vehicle?
All our vehicles are covered by 24 hour road side assistance. In the event of a breakdown or an accident you will receive prompt assistance. Please report any incident to our operations department on 01480 475000.
What do we do in the event of a puncture?
Any puncture or tyre damage should be repaired by the hirer without delay – please refer to your Company Insurance Policy. Cost to be covered by the hirer (you – the customer).
What do I do if the tax disc is lost or stolen?
Contact alliance who will arrange a replacement.
What happens if we lose the keys?
The hirer is charged with the cost of replacement keys. With today’s technology the keys can cost in excess of £200. Please take care of vehicle keys.
I have a cracked windscreen – will you get it repaired?
No. Any windscreen damage should be repaired by the hirer without delay – please refer to your Company Insurance Policy. Cost to be covered by the hirer (you – the customer).
What do we do if a driver incurs a fine?
If a driver is caught speeding or commits any road traffic offence they should comply with your company policy and also notify alliance. If alliance receives notification of a road traffic offence you will ultimately receive an administration charge to cover all our costs in processing.
Who will be liable for the congestion charge?
Any vehicle movement into, out of or within the marked charging zone ("CCZ") between 07:00hrs and 18:30hrs (Monday to Friday), is chargeable at a daily rate. Only one payment per vehicle, per day is required, once the first payment is made, any number of journeys may be made that day into, out of or within the CCZ, by that vehicle. The payment must be made by 22:00hrs on the day the movement was made; otherwise the charge increases. If that is not paid before midnight, a Penalty Charge Notice will be issued (discounted by 50% if paid within 14 days). If the charge is not paid within 28 days, the charge rises.
Further details may be obtained from Transport for London's website: www.cclondon.com.
Your Responsibilities: You must pay for any vehicle movement into, out of or within the CCZ, Where we make a delivery to you, within the CCZ; you must pay the daily rate.
This covers the first day's Charge. All other days' charges, including the charge for the last day of the hire, are your responsibility. When you pay the charge, you will be given a receipt / transaction number for the payment.
Please retain this number as you will need it in case of a dispute between you and Transport for London ("TfL") You can pay by phone, text, Internet, or pay - point, but you must pay on the day you used the CCZ. If you fail to pay, TfL will send you a Penalty Charge Notice.
It is your responsibility to pay this Penalty Charge. If you fail to pay the charge on the day you used the CCZ, you will also be charged an Administration Fee by us. The congestion charge will be the liability of the customer. If you want us to pay for the congestion charge, we can do that but there will be additional charges involved. For more details call alliance.
Can we return the vehicle at any time?
Yes, you may return the vehicle at any time and there will be a early redemption fee to settle.
Can I purchase the vehicle at the end of the contract?
Unfortunately, we are unable to sell contract hire vehicles to the hirer.
Who arranges collection at the end of the hire?
Call alliance on 01480 475000 to arrange collection.
How do I prepare the car for collection?
You will be expected to return the car in effectively the same condition as you picked it up. This means that the vehicle should have the same amount of petrol in the tank as when you took it out.
Expect a thorough inspection of the vehicle when you return it after a hire period – companies will look for scratches, and anything that is not natural wear and tear. As a tip, make sure you inspect the vehicle before you take it out and insist that a company representative notes down any problems. Then, be present when the inspection is carried out on the return of the vehicle so you know exactly what the problems, if any, are.
Will the vehicle be inspected by the collection agent?
Yes, all vehicles are inspected. Different products will have different collection procedures. Please read the instructions outlined with your contract with care.
What should I do if the car has been damaged?
All vehicles must be insured by the hirer (you – the customer) and any damage repaired prior to collection. Your rental charges will continue until the vehicle is made ready for collection. If a vehicle is returned in a damaged condition then charges for repair will apply.
How do you define 'Fair Wear and Tear’ in relation to a contract hire vehicle?
The British Vehicle Rental and Leasing Association's 'fair, wear and tear standard' is the widely accepted industry guide as to what constitutes fair, wear and tear for leased vehicles at the conclusion of the contract period. alliance can provide a copy of the guide to customers when opening a rental account as it provides advice to fleet operators and drivers on maintenance routines and preventative action necessary to keep a vehicle in acceptable condition. The guide also defines the industry standard for every aspect of a vehicle's condition. A vehicle that has been maintained to the condition specified in the guide and showing no unreasonable wear and tear internally or externally will not normally incur end of hire refurbishment charges. However, for damage exceeding the standard, alliance will assess the cost of repair and charge the customer.
What do we do when we have finished with the vehicle?
Simple, call alliance on 01480 475000 and arrange the collection. You will be expected to return the car in effectively the same condition as you picked it up. This means that the vehicle should have the same amount of petrol in the tank as when you took it out.
Expect a thorough inspection of the vehicle when you return it from a daily rental – our agent will look for scratches, and anything that is not natural wear and tear. As a tip, make sure you inspect the vehicle before you take it out and insist that a company representative notes down any problems. Then, be present when the inspection is carried out on the return of the vehicle so you know exactly what the problems, if any, are.
What do we do when the contract is coming to an end?
Simple, call alliance on 01480 475000 and arrange the collection. You will be expected to return the car in effectively the same condition as you picked it up allowing for the BVRLA standard of Fair Wear and Tear. We will contact you to confirm the collection procedure.
Can we extend the short term contract hire contract?
With few exceptions all alliance short term contracts are to terminate as per the original agreement.