Do I need a log book for contract hire?

Do I need a log book for contract hire?

If you have a contract hire car then do you need the log book? Well, first of all, let’s look at what is contract hire?

What is contract hire?

Contract hire describes leasing a vehicle for a set time period. It offers flexible motoring for a fixed low monthly fee. It’s becoming increasingly popular with people who don’t want the hassle of selling on the vehicle at the end of their contract or the worry of depreciation. There are two types of contract hire, Personal contract hire (PCH) and Business contract hire. The only real difference between the two is that the business contract hire allows the VAT to be claimed back.

This video tells you everything you need to know about Contract Hire.

https://youtu.be/sZTKPhA-th8

Contract hire is different to other types of lease agreements. This is because at the end of the contract you do not have the option to purchase the vehicle. Other lease agreements such as hire purchase or personal contract purchase allow you the opportunity to buy the car at the end of your lease agreement. The choice is yours when you reach the end of the contract. You can either hand the car back and start a new lease, buy the car with a pre-agreed balloon payment or hand it back and walk away.

What is a Logbook?

A logbook, otherwise known as a V5 registration document is issued by the DVLA to track the registered keeper of the vehicle. A log book has no bearing on ownership, it only advises who is responsible for the vehicle. When a car is sold, both the seller and new buyer must fill out sections of the log book and send it to the DVLA. The DVLA will then send the updated V5 document to the new registered keeper of the car.

The DVLA must keep a record of who is responsible for the car, or the registered keeper of a car is so that they know who is responsible for taxing the car. It is a legal requirement to tax any car used on the road so they need to be able to enforce this correctly. The V5 document or log book allows them to do this.

A common cause for confusion is the issue of vehicle ownership during a lease agreement.

Who gets the V5 logbook?

This is dependent on the lease type if it is a Contract Hire or Private Contract Hire you will never have the log book, if your vehicle is on an Operating Lease or Finance Lease you will be possession of the log book V5 logbook.

Who owns the vehicle?

The company funding your lease will be the owners and so, therefore, have ownership of the V5 document.

The primary reason the finance company keep hold of the log book is to help protect their capital investment. This way you are unable to sell the car. It is also a way they can ensure the vehicle is taxed and any speeding or parking fines are paid

 

Fines and Penalties with contract hire

Because you are not the registered keeper of the vehicle you may not be the first person to receive notification of any driving related fines or penalties.

For parking fines, if you did not receive a ticket attached to the windscreen, or you fail to pay within the allocated 28-day time frame then a letter will be sent to the registered keeper of the vehicle. In the case of contract hire, this is the lease provider.

There are two different ways that you can be caught for speeding in the UK – either by a policeman pointing a speed gun at the side of the road or by a speed camera. If you weren’t stopped by the police by the side of the road then the speeding ticket will be sent to the registered keeper of the vehicle within 14 days.

In the case of contract hire, the finance company will receive any documentation addressed to the registered keeper of the vehicle. This includes parking or speeding fines. Now, this doesn’t mean they will pay your fines for you… wishful thinking…Usually one of these two scenarios will occur:

1. Forward your contact information to the department issuing the fine. They do this so they can collect the fine payment from you directly. Or,
2. They will pay the fine and notify you. The notification will explain their intent to redeem the fine amount plus an admin charge in your next direct debit payment.

The admin fee charged is usually around £25.00.

Will I ever need the logbook on a contract hire lease vehicle?

On very rare occasions you may need to produce the log book for your contract hire car. Sometimes when you need to obtain a parking permit you will be asked to produce the log book for the car. You can request a copy of the log book from your lease company for a small admin fee.

Alternatively, your lease provider will be able to write a letter to the parking authority or council providing your permit. The letter will detail that the vehicle is on lease and most permit providers will accept this as the evidence they need to issue a permit.

The difference between a registered keeper and an owner

The owner of the vehicle is the person who paid to purchase the car. They have ownership of the V5 logbook and the car is their property.

The registered keeper is the nominated person responsible for taxing the vehicle.

These are the same person if you have purchased a vehicle to use yourself. It can get confusing when it comes to a lease agreement. As the leasee, you won’t be the registered owner or keeper of the vehicle with the DVLA.

So where do you come in as the leasee? Well, the finance company will have you registered as the person leasing the car for the contracted time period. This way they can forward you any important documentation about the car (including fines).

It’s important to ensure you keep your details up to date with your finance company. Failure to do so could result in significant penalties. Especially if you have a parking fine and the ticket issuer is unable to contact you. Interest is charged at a high rate on fines. So if a collection agency is instructed the fees can really mount up high.

In conclusion, the log book for a contract hire vehicle will remain with the finance company who owns the car.