You may already have an idea of the advantages of contract hire deals for your business, but there are some factors that you may not be aware of as well. For instance, the bigger your business and the bigger your need for a fleet of vehicles, the better contract hire arrangements can be. Instead of spending your finances and earnings on buying vehicles, you can simply go for a contract hire arrangement, and it will not drain much-needed funds from your business’ operations. But why else should you seriously consider vehicle leasing and contract hire? What are the top advantages of leasing vehicles for your business? Here, your main questions are answered.
What Is A Contract Hire Agreement?
A contract hire or leasing agreement is simply an operational lease contract that lets your business make use of a vehicle (or a fleet of vehicles) by making fixed payments every month. The period of such contracts can last from around two years to up to four years, depending on the leasing provider. Once the agreement ends, your business will simply return the vehicles to the provider, where you can also obtain or get a new vehicle along with a new contract.
The Biggest Benefit: VAT
One major benefit that comes with contract hire and leasing agreements is your business’ potential savings on VAT. In fact, your business may be able to avoid up to 100% of your VAT, provided, of course, that your vehicle/s will only be used for the business and will not be used for personal trips or travel. But even if you still use it for personal trips, you can avoid around 50% of the VAT as well.
Other Major Benefits
There are other major benefits that come from contract hire agreements aside from VAT savings, and they are as follows:
• Your business can spend a lot less per month – and save up to 60% – if you opt for a contract hire agreement compared to when you opt for a loan or a hire purchase agreement. You can then get more value for your money this way and can spend your business’ funds for other purposes, such as the provision of stock and inventory, new equipment, and so on.
• You don’t need to go about (and go through the hassle of) trying to sell your vehicle/s once you require a new one – you can simply give it back to the provider.
• You will not have to contend with the risk of market value loss from the vehicle/s because you don’t need to sell your vehicle/s at any point.
• It’s also easier now to select your required vehicles online; you can just visit the website of a reputable leasing provider and select your vehicle/s and have them all delivered.
• It is a cheaper option compared to vehicle ownership in the long term, especially if your company needs to replace vehicles on a regular basis or more frequently (every few years or even less).
• Your business can also include any maintenance costs and services in your set monthly payment for your lease.
• Your vehicles will always be in relatively good condition and will be fairly new, helping promote a better impression of your company and a better company image.
Company Car Lease Leverage
Making a decision on your work vehicle is important. Decide if your business should lease a car or truck or purchase it based on your financial situation and goals.