Why Contract Hire?
The Benefits to your Business of Choosing Contract Hire
Below you will find the main reasons why Contract Hire could be the best way to fund your business vehicle requirements. It can take full responsibility for all your vehicles, leaving you with more time to do what you are best at - running your business!
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Fixed Cost Motoring
Contract Hire enables you to enjoy the benefits of a new or nearly new car every 1-4 years for a fixed monthly payment, thus offering you the most hassle free way to drive the car of your choice. |
Reduced Administration
Contract Hire removes most of the paperwork associated with running a vehicle fleet. You are simply presented with one invoice per month to include the cost of the vehicle plus any of the additional services you have requested. |
Maintenance and Servicing
All maintenance, servicing and repair costs can be included in your fixed monthly payment (excluding broken glass and driver misuse), so budgeting becomes even easier and you have total control of your motoring expenditure. You can even include Full Roadside Recovery and a relief vehicle if required. |
VAT & TAX
You can recover a proportion of the VAT charged on the monthly payments assuming you are VAT registered, the percentage reclaimable depending on the usage of the vehicle. Also, rental payments are allowable against taxable profits, again the percentage will vary according to your circumstances. |
Improved Cash Flow
Your business will benefit from improved cash flow for two reasons. Firstly, Contract Hire requires a low initial outlay compared to conventional finance deals, usually only three monthly payments in advance. Secondly, you can release valuable capital into your business if you own your fleet at the moment. |
No Financial Risk
Removing the risk from vehicle acquisition is a very attractive proposition, and one that it seems more and more companies are taking advantage of every year. With Contract Hire, there is no risk to you of depreciation and no need to worry about disposing of the vehicle at the end of the term. |
Off Balance Sheet Funding
The benefits of off Balance Sheet funding can be huge. When you contract hire your vehicles, they do not show on your balance sheet. This makes your profits a larger percentage of the total asset value of your company, and your business becomes more attractive to investors, shareholders and financial institutions. |
Your Options at Termination
At the end of the contract hire period, you have the choice of three options. You can either hand the vehicle back and replace it with a new one, extend the contract, or get a quote on the purchase price and buy it as a private sale. It's up to you. |
