Business Contract Hire is one of the most widespread car contract hire deals. Due to its fixed monthly payments, included servicing options, and possibilities to be used to run a fleet, Business Contract Hire is also one of the most popular ways for businesses to hire vehicles. To give you the full details, pros, and cons of Business Contract Hire, we’ve put together a guide explaining this method of vehicle leasing.
What are the advantages of Business Contract Hire?
• Business Contract Hire presents a budget friendly way for businesses to run their fleet. They offer a low initial payment, typically 3 months upfront. Then, a fixed payment, determined by estimated mileage and the type of vehicle leased, will be paid each month up to the agreed contract end date. Plus, a lease can offer a business tax advantages, as the charge of rental is often able to be offset against taxable profits.
• This method of leasing reduces hassle for businesses, as it’s likely that there will be an option within the contract for maintenance, servicing and repairs to be supplied.
• Vehicles depreciate in value quickly, and purchasing a fleet of vehicles that will lose value is an unnecessary way of tying up capital. However, with a Business Contract the business never truly owns the vehicles leased, thus vehicle depreciation and the hassle of resale needn’t be worried about.
• Having a leased fleet allows for businesses to accommodate for any changes in market or staffing conditions. As leases generally last between around 24 and 48 months, businesses can quickly and flexibly respond to changes affecting vehicle usage.
What should I consider before taking out a Business Contract?
• As with any car contract hire, you should make sure you have an idea of your annual mileage requirement. This can help you decide whether a business vehicle lease is right for you, and can also help you avoid having to pay excess if mileages are exceeded.
• Whilst everyday wear and tear is accounted for in business car lease deals, anything further can lead to excess charges.
• Whilst some business car leases offer the option of purchasing the vehicle once the contract has ended, this doesn’t apply for Business Contract Hire.