Whether the business requires a company car for traveling to meetings, a few repair vans, or an entire fleet of vehicles for a mobile workforce business contract hire can save a substantial amount of money over purchasing vehicles. Contract hire is a finance agreement between the business and a lender. The lender owns the vehicles and the businesses hires them for a specific amount of time.
The lengths of contracts, or leases, range from two years to five years. Monthly payments are fixed and include the road tax. The biggest reason to consider contract hire rather than purchasing is that payments are considered a business expense so they are liabilities. A purchased vehicle is considered capitol, which is an asset.
Another reason is that the business has no depreciation risks. Vehicles are under manufacturer warranty and it is unlikely that major repairs will be required. At the end of the contract the vehicles are returned to the lender. New vehicles can be contracted without the business worrying about selling the used ones first. New vehicles every few years can also help maintain a professional image for the business. Old repair vans, for example, do not necessarily instill confidence when entering the driveway of a customer.
The variety of options when leasing vehicles is also why businesses should consider contract hire. Cars, trucks, and van are available from over forty manufacturers that include basic models to luxury cars and SUVs. Other options include the length of the contract, the mileage allotment per year, and the amount of the down payment at signing. A monthly payment amount can be customized to meet the needs and budgets of all types and sizes of businesses.
Ancillary products are also available at low cost for the duration of the contract. GAP insurance, for example, will cover any differences in the amount of insurance and the value of the vehicle in the event of a total loss. That is helpful when contracting out high value or luxury vehicles. Tyres and servicing will save money on routine maintenance for the entire fleet of vehicles. Motor insurance and accident management are also available products. Owners can compare the cost of contract hiring and the total costs of purchasing company vehicles to determine which will save the business more money.