What can Contract Hire and Leasing offer Contract hire and leasing provides the consumer with a vehicle contract hire or finance agreement spread over a pre-determined period from 12 months to 5yrs with contract mileage ranging from 5,000 – 50,000+ miles p.a all at a fixed monthly contract hire and leasing rate. This often includes the road fund licence, breakdown and recovery and many other optional ancillary services such as full maintenance, tyre replacements, courtesy vehicles, accident management and even fuel cards if required all held within a sigle contract hire or leasing agreement.
What are the benefits for most Contract Hire and Leasing customers?
Customer avoids risk on disposal or depreciation.
Customer avoids sourcing vehicle and locating the vehicle of your choice to the right specification.
VAT is redeemable on vehicle purchase - This benefit passes directly to the customer through cheaper monthly rentals.
Customer reclaims VAT on the contract hire finance element of rental - 50% of VAT reclaimable if private use of the vehicle. If no private use then 100% of VAT reclaimable
Customer reclaims 100% VAT on services element of the contract agreeement
Contract hire monthly rentals are off set against corporation tax - subject to £12,000 disallowance rule (half the excess rule).
Interest cost allowable as tax deduction - subject to restrictions.
Contract hire for private users - You can take advantage of large fleet buying power with minimum deposit required, usually only 3 months up front.
Accurate cash flow forecasting from fixed monthly contract payments
Contract hire does not increase company gearing for business users (off balance sheet funding).
Contract Hireallows you to pay a set monthly fee with no depreciation risk or disposal issues. A full maintenance contract will prevent any unexpected repair costs.
Contract Hire versus hire purchase car loans - Contract hire leasing is effectively is a long term car rental agreement with vehicle being returned at the end of the agreement. Whereas, hire purchase once you have made all the payments HP instalments, you will own your car outright.
Before you take out a contract hire agreement, we suggest you consider what changes may happen during the life of the car leasing agreement. Are you looking at a car lease agreement because you have been offered a cash alternative from your employer, or are you considering the alternative way of using are car by taking out a car leasing agreement because it may be cheaper?
Consider what the payment you would have to make if you decided to hire purchase a new vehicle. Opting for a cont
