A contract hire facility is a service whereby the customer does not own the vehicle but can use the vehicle leased out to him by the leasing company for personal or company use. The service and maintenance costs of the vehicle are also borne by the company itself. There are a number of leasing companies listed on the website from where you can choose the leasing company which best suits your requirement.
A leasing company has extensive experience in carrying out contract hire services and can help you boost your revenues and reduce costs by helping you cut down the cost of running the company vehicles and save tax. There may be cases where your business due to financial or other difficulties does not want additional responsibility of owning company vehicles. In such circumstance you should consider Contract Hire which would be the best solution to your problems.
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In a contract hire service the vehicle leased to you, continues to be owned by the leasing company. The vehicle is hired by you for a fixed period of time at a fixed monthly amount which is to be paid to the company on a regular basis. The additional costs of maintenance and depreciation are borne by the leasing company thus reducing the burden of the additional costs off the customer’s shoulders.
The monthly payment to be made by customers on the vehicles rented to them depends on a number of factors. These factors include the period of the contract, the estimated mileage during the contract period and the probable resale value of the vehicle at the end of the term. This also includes the service and maintenance costs in certain cases. Under the contract hire agreement the lender of the rented vehicle retains ownership and therefore also bears the risks such as unforeseen costs and uncertain resale amounts.
Benefits of Contract Hire Services
There are many tax benefits for customers who take the advantage of contract hire services such as deductions against corporation tax for people using rented vehicles. Where vehicles are used partly for private use, the customer can take advantage of recovering 50% of value added tax as against 100% for rental vehicles. The other advantage of having a contract hire agreement is that the vehicles used by the company are not recorded in the Balance sheet of the company thus improving the company gearing ratios.
A contract hire service agreement gives you the benefit of using a new vehicle for a fixed monthly rent thus enabling you to release capital from your current vehicle by selling it and getting a bigger lump sum amount which you can invest for other important business needs. This also reduces the burden and responsibility which comes while owning a vehicle and you can even save on the maintenance and repair costs of your old vehicle which you can instead sell off and use the new rented vehicle instead. There are options of purchasing the rented vehicle at the end of the contract term if you are satisfied with the usage of the vehicle and if your finances have improved considerably by then.
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