Contract hire and leasing VS car renting

Contract hire and leasing of vehicles is fast becoming a trend especially, in the UK. In recent years most people prefer to contract hire or lease their car rather than buy a new or used car. Leasing or contract hire of vehicles prevents people from tying up their capital in a depreciating asset. This is similar to renting a vehicle. However when you rent a car the disadvantage is, that over a period of time you end up paying the owner a greater sum than the initial cost of the car. In contract leasing and hire you will only pay an agreed estimation of the vehicles depreciation. Every car depreciates by almost 50% over three years. This value is set prior to the contract agreement. This goes to prove that contract hire/ leasing is more beneficial to you than buying a new car or renting a car.

Benefits of contract leasing

Stated here are a few benefits you can avail of if you contract hire or lease your vehicle:

·         Leasing a car allows you to drive away with a new car every few years and pay as little as half the original price.

·                     ⁽¹⁾The minimal initial expenditure (down payment) of approximately three months advance allows you to easily change your car to suit your family needs.

·                     ⁽¹⁾With contract hire and leasing you pay a fixed rate for your car every month, this allows you to accurately budget your cash flow forecast.

·                     The fixed monthly payment you make for your vehicle can also incorporate the vehicles maintenance, break down cover and relief vehicles.

·                     ⁽¹⁾The leasing company can reclaim all VAT on the vehicle purchase price to give you much lower monthly payments.

·                     ⁽¹⁾For new cars and VAT qualifying cars, assuming some personal use, the current legislation allows you to reclaim 50% VAT on your monthly rental against your VAT liability. The other 50% can be offset against your taxable profits.

·                     Some contract hire and leasing companies like FB Contracts include in the agreement replacement vehicles in the event of an accident or breakdown, full membership of a monitoring emergency programme including Home Start, Road Side Assistance, Relay, Relay Plus and European Cover, individual or fleet insurance cover, full range of competitive insurance products. 

Few disadvantages of contract hire and leasing

We could say the only disadvantage of contract hire and leasing is that you are held to the contract. This can be costly if you wish to break out or end the contract early. However the contract can be tailored to suit you that is, you can be given an option of how long you want to keep your vehicle.

Contract hire and FB Contracts

FB Contracts is a contract hire and van leasing company located in Swindon and Wiltshire. They have an online database of different cars, for you to choose from and your car will be delivered to you anywhere in the UK. FB Contracts has a number of vehicle leasing options these include contract hire, finance lease, flexi-lease, personal contract hire, sale and lease back among others. In addition their funding packages also offer customers a number of car insurance products and fuel card products.

⁽¹⁾Source: http://www.fbcontracts.co.uk

Contract leasing is used to describe a long term, usually 3 year rental of a vehicle. There is a huge demand for vehicles in the contract hire and leasing sector. The UK contract hire and leasing industry is the most successful and best managed among all the other industries, worldwide. This industry is driven by UK’s tendency for company funded vehicles for business- or perks. The companies rent vehicles to business users, normally including maintenance and repair plan for the period of the user’s choice. The vehicle remains in the property of the Lessor (Contract hire company) and never becomes the property of the lessee (the company renting and using the vehicle). Apart from the major players who concentrate mainly on corporate fleets and affinity car hire schemes, a significant broker channel has emerged. Brokers exist as aggregators and attract fee income based on arbitrage by finding the lowest cost leasing supplier for a particular make and model. Alternately one can also try online vehicle leasing sites like www.fbcontract.so.uk to find and lease the vehicle of your choice, this way you can avoid the broker’s costs.

Here are some of the reasons why contract leasing is more beneficial than vehicle purchasing:

Release Capital – If you are currently purchasing your vehicles through your own funding, you are inadvertently tying up a valuable proportion of your company’s financial resources. Contract leasing releases these funds for more profitable use.

Accurate Budgeting – With contract leasing, all costs are calculated by experts and built into a fixed monthly payment. Vehicle costs can be forecast accurately for up to five years. Paperwork is almost eliminated and budgets tightly controlled.

Tackles Depreciation – Owing to our buying power, we can purchase vehicles at cheaper rates. Efficient vehicle disposal always enables our Finance Houses to accurately assess resale values. Only the minimum depreciation is passed on to our customers, resulting in realistic rentals.

Improves Cash Flow – Contract leasing will improve your company’s cash flow through low initial outlay.

Freedom of Choice – We can supply all makes of cars and vans at competitive Contract leasing rates. You choose the model, colour, specification and accessories to suit you. We then offer expert and unbiased advice on all makes and models that might meet your needs and budget.

Off Balance Sheet Funding – Contract leasing is classed as an operating lease, which means that the vehicles do not show as depreciating items on your balance sheet. Rentals are classed as a revenue expense and are shown in the profit and loss account.

Reduces Administration – If your management and staff is currently weighed down with time consuming vehicle administration contract leasing releases them from this burden, so they can achieve more profitable objectives. Contract leasing significantly reduces paperwork. Road fund licence supplied and renewed automatically.

Enhances Company Image – With contract leasing you will always have modern and presentable vehicles. Contract leasing will also give you a disciplined replacement program.

VAT Benefits – Contract leasing has many VAT benefits. Our Finance Houses can reclaim the VAT on the purchase price of the vehicle and pass on these benefits to our customers. Also, once the vehicle is on the road, you can claim back 50% of the VAT on the finance element (if the vehicle is available for personal use or 100% if only available for business use) and 100% of the VAT on the maintenance element of the rental payments.

Peace of Mind – With monthly payments fixed over the entire contract period and a range of optional extras, Contract leasing takes away the worry and trouble of managing your company cars and vans.

A Selection of Cost Options- Breakdown recovery service, including home start and relay, Replacement vehicle for mechanical/accident breakdowns, Routine maintenance and unscheduled mechanical repairs including replacement tyres, batteries and exhausts.

If you want to avail of all these benefits of contract leasing visit us at www.fbcontracts.co.uk

Bibliography:

http://www.ashcontracts.co.uk

 Vehicle leasing and contract car hire is fast becoming the country’s most popular method of vehicle funding. If you are planning to lease a new car, then there are some guidelines to purchase the car at a concessional rate at the end of the lease period. Vehicular contract leasing companies offer a fixed monthly payment that can incorporate maintenance, breakdown cover and relief vehicles. What more? If the car you have leased is put up for sale in the market with a minimal cost than what it originally raised as the price at the end of the renting period, you can interfere at that very moment and purchase the car at a cheaper prize than the book value. Some additional advantages on vehicular leasing include: significant tax advantages, you can choose any make which may be sourced and delivered to you free of charge, you can enjoy a new car every two or three years, you will be paying a low deposit, you pay low fixed monthly payments, the contract length and mileage are tailored to your specific requirements, GAP insurance and early termination insurance are available and you have the chance to own the car at or before the end of the contract.

Leasing of cars is becoming a norm in recent years because of the low expenses on a monthly basis and it helps the customer to drive away with their dream car and that too with a minimal amount of money to pay and without any botherations. Some vehicular contract leasing companies provide deals for cars and vans from all the manufacturers and delivers them anywhere in the UK with the aim to help one find the vehicles of their choice at the right price along with the right leasing option to suit business or personal vehicular leasing needs. The procedure to lease a car is easy, after the enquiry and quotation stage, you can make a payment through credit with a Credit Acceptance from the financing company of the vehicular contract leasing firm. The after-sales support that most vehicular leasing contract firms offer are looking after your account and being available to offer support during the contract, assistance in changing contract mileage should one require, offering advice on maintenance of the vehicle irrespective of whether one has taken a maintained contract or not. If you purchase your vehicle at the end of the contract, the vehicular contract leasing firm assists you in the disposal, renewal or continuation of the contract at the end. You can replace your vehicle to enhance your buying experience.     

Some additional benefits that select vehicular contract companies offer their clients are contract hire, contract purchase, personal contract hire, personal contract purchase, sale and lease back. In addition to these funding packages some vehicular contract companies also offer their customers a number of car insurance products and fuel card products.