In contract hire, which statement is true?

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Multiple Choice

In contract hire, which statement is true?

Contract hire is a leasing arrangement where you rent a vehicle for a fixed period with an agreed mileage, and ownership stays with the leasing company. The statement about excess mileage being charged is true because you set a mileage limit, and if you drive beyond that limit, you pay a per-mile fee for each extra mile. This mechanism keeps monthly payments lower while protecting the lender against depreciation from high usage. Ownership is not transferred to you from the start, which is a key difference from buying or certain other finance options. Maintenance can be included in some contract hire packages, but it isn’t universal, so it’s not accurate to say maintenance is never included. Finally, terminating early typically incurs a charge or penalty to cover the costs and depreciation the lender would face, so you don’t get to terminate without any charge.

Contract hire is a leasing arrangement where you rent a vehicle for a fixed period with an agreed mileage, and ownership stays with the leasing company. The statement about excess mileage being charged is true because you set a mileage limit, and if you drive beyond that limit, you pay a per-mile fee for each extra mile. This mechanism keeps monthly payments lower while protecting the lender against depreciation from high usage.

Ownership is not transferred to you from the start, which is a key difference from buying or certain other finance options. Maintenance can be included in some contract hire packages, but it isn’t universal, so it’s not accurate to say maintenance is never included. Finally, terminating early typically incurs a charge or penalty to cover the costs and depreciation the lender would face, so you don’t get to terminate without any charge.

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