What is contract hire?

Study for the Specialist Automotive Finance Test. Use flashcards and multiple-choice questions with detailed explanations to get exam ready!

Multiple Choice

What is contract hire?

Contract hire is a way to fund the use of a vehicle by leasing it for a fixed term with regular, fixed monthly payments. You use the car, but ownership stays with the leasing company, and at the end you return the vehicle (with possible charges for excess mileage or wear). This setup is best described as flexible leasing to fund the vehicle, since it focuses on leasing to use the car rather than buying it. Ownership, no maintenance, or a large final payment don’t define contract hire: you don’t own the car, maintenance can be included but isn’t universally guaranteed, and there isn’t a mandatory large balloon payment at the end like you’d see with some purchase-focused products.

Contract hire is a way to fund the use of a vehicle by leasing it for a fixed term with regular, fixed monthly payments. You use the car, but ownership stays with the leasing company, and at the end you return the vehicle (with possible charges for excess mileage or wear). This setup is best described as flexible leasing to fund the vehicle, since it focuses on leasing to use the car rather than buying it.

Ownership, no maintenance, or a large final payment don’t define contract hire: you don’t own the car, maintenance can be included but isn’t universally guaranteed, and there isn’t a mandatory large balloon payment at the end like you’d see with some purchase-focused products.

More practice questions