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You may be contemplating purchasing a new car for your company car pool, or instead you might be wondering about a contract hire and leasing vehicle. So, what are the reasons for choosing a contract hire leasing vehicle in excess of buying a new car? Purchasing a new car does, at first, seem the sane option. After all, your payments give an asset that you, or your business, will own. Vehicles Decrease in value Very Quickly But the problem with buying cars is that unlike property, they devalue over time. Merely driving the car out of the sales room devastates the value and the investment. So, is contract hire leasing a suitable alternative? For a start, contract hire will protect your business against that depreciation that hits brand new vehicles. But obviously, you are still paying over the long term for the vehicle. First, The Tax Benefit But as the car, or van, is being paid for on a monthly lease instead of being bought outright, you can then put the entire amount of expenditure down on your balance sheet as costs rather than slowly writing off the cost of the vehicle over several years. So, contract hire offers a tax benefit. Straightforward Budgeting Services such as fair maintenance of the car could be included in the monthly premiums, if required. This means that you know from the outset the exact cost of the vehicle that you are acquiring and are not hit by sudden, unexpected bills. Even the road fund tax could be included in the contract. As well as including maintenance, the monthly cost of hiring the vehicle is fixed, rather than subject to interest rates varying on a loan. Yet another reason why you are able to budget for the exact price of the vehicle rather than having to second guess what your bills might be this time in a year or two. Less Taxes On The Charges Also, the supplier of the vehicle is able to reclaim the VAT on the purchase of the vehicle initially, meaning that the price to them is lower, which in the competitive market that we are seeing at the moment means that there is a price saving that they have to pass on to you, the end buyer. Calculating Your Premium So how is the price of the contract hire leasing calculated? Not an straightforward calculation, but not too difficult. The price of the vehicle to be bought from new is taken as the starting point, less the included VAT that will be recovered. Then the expected depreciation on the vehicle for the duration of your intended hire leasing is worked out, based on the purchase price, the length of hire and predicted mileage. In short, this reduction plus interest charges and any optional extras is what the total price of your contract is going to be, which is divided over the number of months that you intend to have the vehicle. Obtaining your next company vehicle through contract hire leasing can be only what you need to reduce the costs whilst increasing the security of the knowledge of exactly what the outlay should be.
Article Source: http://sports-articles.net
By Keith Lunt. If you want to arrange you contract hire and leasing, go to 1st4contracthire.co.uk.
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