Almost all businesses need a vehicle or two – but what if your business requires a whole fleet, whether it’s trade vans or cars for corporate executives? It’s going to be a hefty investment if you have to pay for those vehicles out of your business pocket, and what will you do once the vehicles depreciate after a few years? It’s another headache trying to sell and dispose of them, and the price you can get is almost guaranteed to be below market value. This is precisely one reason why many businesses are increasingly opting for vehicle leasing, and it could be the ideal solution for your business, too. Here’s what you should know about business vehicle leasing and contract hire deals – and why they work.
- Lower initial expenses
The cost to lease a vehicle (or several) will always be lower than buying them, so you can save on your initial expenses and spend your finances buying stock or establishing a good marketing strategy. A standard contract hire deal involves paying a monthly fee, and you only have to come up with a minimal deposit. With a contract hire deal, you can easily make use of new vehicles without spending an excessive amount of money, and you can spend the money you save on other, more lucrative endeavours for your business. Leasing and contract hire deals also come with additional financial incentives, making them a cost-effective option for various businesses, big or small.
Here’s another thing about vehicle leasing that makes it incredibly feasible: your monthly payments will not fluctuate throughout your contract, and since they are fixed, it will be easier to plan your budget and expenditures without worrying about any unpleasant surprises.
- No more depreciation worries
Picture this: if you had to purchase the vehicles you need, you would probably lose around 60% of those vehicles’ value in just the first several years. This amount can be considerable, and it can also be a struggle trying to sell them when the time comes. But with a vehicle leasing agreement, you don’t have to contend with any worries about depreciation. Once your term has ended, you can return the vehicles to the provider, who will then contend with the depreciation of the vehicles. Then, if you want, you can choose your next new vehicle to use – so you can have a fleet of new vehicles once every few years!
- The possibility of reclaiming VAT
It’s also entirely possible to reclaim your business’ VAT once you go into a contract hire arrangement. It’s a benefit if you have a VAT-registered business because you can reclaim the value-added taxes from your vehicle lease. If you use the vehicle/s for both personal and business circumstances, it’s possible to claim as much as 50% of your VAT. If you use the vehicle/s entirely for your business, the VAT you reclaim can be as much as 100%.
- Ease in vehicle maintenance
Vehicles breaking down can be an absolute nightmare, especially if you have to spend a lot to get the vehicle back up and running. But contract hire deals often come with maintenance and repairs, allowing you to save on your expenses. Besides, you have a fleet of new vehicles, which lessens the chances of them breaking down, if at all.