This kind of hire consequently enables the release of tied up assets for further effective use within the company generating the optimum cash flow.
Latest statistics reveals that around 62% of company cars are funded through contract hire, because new firms are understanding the advantages of this sort funding that the percentage is continually growing.
Contract hire in basic terms it is the cost of the calculated depreciation on a car over a set period of time usually between 24 to 48 months and a set mileage plus a fixed interest charge for the lease of that car assuming the company user does not exceed the parameters of the contract i.e. excess mileage or damage to the car above what is categorized as fair wear and tear.
Business's can select optional extras such as maintenance, breakdown cover, Accident Management etc tailored to suit your exact requirements and therefore cut your administrative time for more key concerns.
This makes it possible for simple budgeting for forward company planning with fixed hire costs. The only added variables are the overheads for fuel and insurance when a full package is undertaken.
Whether it is a business or personal contract that is required, there are numerous types available. These are contract hire, personal contract hire, finance lease or personal contract purchase.
Since 1995 the new VAT laws make leasing a more attractive way for companies to lease their cars as leasing businesses can claim back all the VAT on a qualifying automobile, as a result the finance element of the car lease is calculated on the price of the vehicle less the VAT, not the show room price, saving your small business money and by purchasing your car using our discounted fleet terms we can save you even more money.
Also if your business is VAT registered you can also claim back up to 50% of the VAT charged on the funding of the automobile and up to 100% the VAT charged on the maintenance applicable when the automobile is for firm use. If you are a VAT registered small business then a percentage of the VAT can be reclaimed back off the monthly leasing payments.
For vans/commercial vehicles used only for business purposes the hirer could claim 100% of the VAT on both the finance and the maintenance.
As an alternative company Directors may well discover they are financially better off by paying themselves a car allowance and opting for Personal Contract due to the benefit in kind CO2 tax laws.
At the conclusion of the agreement the car is returned to the funding supplier When a contract hire finishes the car is usually collected by the funding Deciding on Car Contract Hire and Lease Packages.
However, if the company requires a lease extension whilst awaiting the factory order of their next vehicle this can often be organized easing the transition between vehicles with the least amount of fuss. This may well minimize your companies automobile administration to just picking the car and leaving you only with paying for fuel, oil and insurance.
Author Resource:
By Stuart Watt . For car leasing news or to arrange contract hire , go to 1st4contracthire.co.uk
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