With an eye on the snow (and a wheel in a ditch), we look at a contract hire package taking care of a crisis when your vehicle lets you down - maintenance contract hire.

You can either add “with maintenance” to your next contract hire vehicle or take the risk on the servicing costs yourself.

There are several factors to consider before deciding whether to build in “with maintenance” into your rental.

There are also some exclusions to what the leasing company will pay for so do ask what is covered and what is not.

For example, damage to the vehicle will not be paid for.

The useful guide below should help you make your decision depending on your own circumstances.

The basic questions to consider

How reliable is the car or van you want to contract hire?

New vehicles should not go wrong provided they are serviced in line with the manufacturer recommended servicing intervals, but sometimes they do.

You should research the reliability of your new vehicle.

Our annual FN50 survey looks at the reliability of thousands of company cars and vans.

What are the servicing intervals for your next car or van?

Some manufacturers are extending their servicing frequency, so you do not necessarily have to service the vehicle every year.

How long is the standard manufacturer warranty period and what are the exclusions to this warranty?

What mileage do you expect to do every year?

If you expect to do lots of miles it is worth considering building in “with maintenance” into your rental.

For low mileage users, you will need to evaluate the costs a bit more.

This simple guide should help you either way

The costs below are samples, to explain the principle of working out the benefits of "with maintenance contract hire.

You should estimate them yourself after your own research.

The example below has also been shown over a three year period.

Shorter or longer periods will affect your results.

The estimated costs of paying for your maintenance and servicing yourself include VAT at the prevailing rate.

If you think there will be an increase or decrease in VAT in the future, your cost estimates should reflect this.

Results and comments

On the above example, on a 3 year contract hire term, with 3 initial payments followed by 35 subsequent payments you should allow £34.21 per month (i.e. £1300 divided by 38 payments).

VAT is added to all maintenance contract hire rental payments.

The maintenance rental on contract hire is fully recoverable under current rules.

If you are a personal or private user you should take off the VAT i.e. divide £34.21 by 1.15 = £29.75 as you have to pay the full rental including VAT and cannot recover this cost.

Now get a quote for both “with” and “without maintenance” and see if it is worth adding the fixed maintenance contract hire payment to your rental.

Source: Compare Contract Hire Ltd.