Contract Hire is a easy answer for businesses to get automobile funding.
This is in the form of a lease/contract hire, designed for vehicles or commercial van leasing and is accessible to Sole traders, Partnerships and Ltd Companies enabling them to acquire their vehicles without the economic risk of depreciation on what would more often than not be a large capital cost.
By following the leasing path, a corporation can lower cash output and so increase the company cash flow.
Research has established that nearly 62% of all fleet registered automobiles are funded through automobile leasing, which is increasing day by day as new organizations become aware of the financial benefits and advantages of this hire option.
Contract hire in basic terms it is the cost of the calculated depreciation on a vehicle over a set period of time usually between 24 to 48 months and a prearranged mileage plus a fixed interest cost for the lease of that vehicle provided the business user does not exceed the parameters of the contract i.e. excess mileage or damage to the vehicle above what is classified as fair wear and tear.
Companies can go for optional extras such as maintenance, breakdown cover, Accident Management etc tailored to suit your precise needs and so cut your administrative time for other key concerns.
This allows easy budgeting for forward business planning with fixed hire costs. The only other variables are the expenses for fuel and insurance when a full contract is undertaken.
Vehicle leases and car contract hire methods consist of, contract hire, contract purchase, finance lease for companies whilst providing personal contract hire and personal contract purchase for the private sector.
Leasing has become increasingly popular since 1995 as a result of the VAT procedures which enables the finance organizations to reclaim all the VAT back on the purchase of the car. This reduced automobile cost less the VAT is passed on to the partnership who is leasing the automobile.
Also if your business is VAT registered you can also claim back up to 50% of the VAT charged on the funding of the vehicle and up to 100% the VAT charged on the maintenance applicable when the automobile is for partnership use. If you are a VAT registered organization then a proportion of the VAT can be reclaimed back off the monthly leasing repayments.
For vans/commercial vehicles used only for business purposes the hirer may claim 100% of the VAT on both the funding and the maintenance.
Some company directors prefer to take a vehicle allowance and have a personal contract hire in order not to incur benefit in kind tax..
At the end of the contract the vehicle is returned to the funding supplier When a contract hire ends the car is normally collected by the finance company.
However, if the business needs a lease extension whilst awaiting the factory order of their next car this can often be arranged easing the change over between cars with the least amount of fuss.
This can reduce your companies vehicle administration to just choosing the vehicle and leaving you only with paying for fuel, oil and insurance.
Author Resource:-
To find out more about contract hire visit www.1st4contracthire.co.uk
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