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Business Car Leasing Information

What is Business Car Leasing and Contract Hire ?

If your business usually buys company cars with cash, a bank loan, or through a traditional hire purchase scheme you could find that business contract hire is the most-effective way to purchase your new vehicle.

With business contract hire, in return for a fixed pre-determined stream of rental payments, the finance company supplies the vehicle and takes full responsibility for its depreciation, funding costs and administration.

If an including maintenance contract is taken this is also extended to the provision of all servicing and repairs this excludes accident repairs but does include tyres, exhausts etc. It also typically covers the road fund licence and where specified or opted for, a replacement vehicle as well. The rental calculation is based on time, mileage, and also the cost of maintenance where this is included in the contract.

Since August 1995 the finance companies have been able to reclaim the VAT levied on the price paid for the new vehicle, and these benefits are reflected in lower monthly rentals, The rentals themselves carry VAT and normally 50% of this VAT can be reclaimed by the hirer assuming the individual is VAT registered.

Key Benefits for Contract Hire

  1. Low deposit.
  2. More capital available for your business.
  3. Flexible deposit terms.
  4. Vat on rentals reclaimable.
  5. Low monthly payments, particularly on prestige cars due to strong residual value.
  6. Fixed costs.
  7. Off balance sheet borrowing.
  8. No time consuming disposal.
  9. Choice of rental periods.
  10. No depreciation risk.
  11. No final payments.
  12. Maintenance on cars can be included.

For anyone thinking about contract hiring a car, it's very important to understand what contract hire is — and what it is not — and how it works and if you have any questions no matter how small just give us a call.