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Contract Hire is an ideal tax efficient funding product for any VAT
registered business who doesn't want the financial risk of running their
own cars or vans, and who would like to simplify buying, servicing and
disposing of their vehicles.
Vehicles are
hired for a pre-determined period at a fixed monthly rate. The leasing
company retains ownership - and the risks associated with them - and at
the end of the contract simply takes the vehicle(s) away.
Customers
choose the exact model, specify any options and choose the colour etc.
Both new and used vehicles (up to 12 months old) are available and
contracts can last anywhere between 2 and 5 years, with vehicles
covering up to 150,000 miles. Occasionally special 12 month contracts
are available.
The other
key benefits of contract hire are:
- Fixed Monthly Rentals
A fixed monthly payment is charged over the life of the contract and the
initial payment is normally equivalent to just three month's rentals.
Fixed costs make budgeting much easier. In turn more accurate budgeting
can help to improve cashflow.
- Fixed-Cost Maintenance
To further help budgeting and aid cashflow, Contract Hire is available
with a fixed-cost maintenance package. If selected, then an additional
monthly charge takes care of all servicing and tyre requirements as well
as any repairs. (Damage is the customer's responsibility).
Other
facilities can be included in the maintenance package, such as AA or RAC
membership and the provision of a loan vehicle in the event of the
contracted vehicle being immobile due to mechanical failure or accident.
- VAT Benefits
As leasing companies can claim back 100% of the VAT on new cars, Contract
Hire rentals are calculated taking into account the pre-VAT price. This
benefit is then passed to customers in the way of reduced rentals. Once
the vehicle is on the road, VAT registered customers can claim back 50% of the VAT on
the finance rental cost* and, if selected, 100% of the VAT on the
maintenance element of the rental.
*If the
vehicle is a car. Alternatively, if a van or other commercial then 100%
of the VAT can be claimed back.
- Off Balance-Sheet Funding
Under a contract hire agreement, vehicles do not appear on a company's
balance sheet as they are owned by the leasing company. The removal of
capital assets from the balance-sheet can enhance a company's gearing
(borrowing) ratio.
- Reducing Financial Risk
Managing the risks involved in running even a small fleet of vehicles is
all important, and that's exactly what businesses can do by opting for
Contract Hire. The leasing company take all the risks involved in
everything from residual values and maintenance to interest rates, which
simply leaves the customer with insurance and fuel costs.
- Reducing Administrative Hassles
As Key Vehicle Solutions supply any make of vehicle and the leasing
companies arrange servicing and disposal, customer's paperwork and
ongoing administration is kept to a bare minimum.
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Quote & Info Line: 0845 166 2405
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