Let's Talk Leasing - Colin Kirkpatrick

We asked Agnew Leasing's Head of Sales Colin Kirkpatrick his most frequently asked questions around excess mileage, understanding Business and Personal Contract Hire and effective rental.

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Why do you have an excess mileage charge?

Mileage on any vehicle is a major contributing factor when determining the value. As we are predicting the future value and the start of a contract any additional mileage upon return results in a reduction in the cars value and therefore an excess mileage cost is charged.

Two key points I would mention is that any costs are a realignment of what the monthly costs would have been had the correct mileage been quoted for at the start, so they are not a penalty. I would also add that if you have a fully maintained contract with Agnew Leasing and exceed the allowed mileage, we will continue to maintain the vehicle until the end of the contract irrespective of mileage.

What is the difference between Business Contract Hire and Personal Contract Hire?

Business Contract Hire or BCH is for VAT registered companies whereby they can run a fleet of cars and vans with the ability to claim 50% of the VAT back on both the monthly rental and 100% on the maintenance element.

Personal Contract Hire or PCH is for private individuals who wish to lease a vehicle rather than purchase. The main advantage to this is they have no disposals worries at the end of the contract and the monthly cost is fixed for the duration of the contract. Maintenance can again be built in to give the customer a complete cost for running the vehicle over the agreed term.

Another advantage in both BCH and PCH is that road fund license is included for the duration of the contract and is administrated by Agnew Leasing, so you have no need to consider this while you have the vehicle.

What is the Effective Rental?

The Effective Rental relates to Business Contract Hire and is the figure after all recoverable VAT has been reclaimed, so in other words, it is the true cost to the business. For businesses using contract hire as their means of purchase they can claim 50% of the VAT back on the monthly rental and 100% on the maintenance. The reason behind the 50% and not 100% on the rental is due to the fact the vehicle will also be used for personal use as well as business, so the full relief is kept to 50%.

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