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With Contract Hire, in return for a fixed pre-determined monthly rental payment, the finance company supplies the vehicle and takes full responsibility for its depreciation, funding costs and administration. When a maintenance contract is included the finance company provide all servicing and repairs. It also typically covers the road fund licence and, where specified, replacement vehicles as well. The rental calculation is based on the term and mileage, and also the cost of maintenance when it is included in the contract. Assuming the hirer is VAT registered, 100% of the VAT on rentals can be reclaimed and the agreement stays on the balance sheet
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