If your business is looking for a comprehensive, fixed cost motoring package where full usage of a new vehicle is important but ownership is not, then you should consider contract hire. This method can be useful for companies wanting to free-up credit lines or improve cash flow by implementing fixed-cost fleet operation.

One of the biggest advantages of contract hire for businesses must be that you can significantly reduce your initial outlay by not buying new cars and consequently you have money to spend elsewhere in the business. You also have a fleet of cars that always looks smart and well maintained. This reduces the likelihood of breakdowns and the need for repair and, in turn, portrays a professional image in the business market.

The main features of contract hire are:

• Contract hire is a Hiring Agreement where the vehicle remains the property of the Finance Company
• The vehicle is disposed of by the Finance Company at the end of the contract hire period
• The contract hire period is usually set between 2 and 5 years
• The contract is for a set mileage usually for a maximum mileage of 100, 000 for petrol engines and 120,000 for diesel engines

As a business owner you’ll be well aware of the importance to provide a decent benefits package to your employees, not only to attract the best people for the job, but also for morale. Company cars may be one of these benefits, but to buy them brand new, you’ll know is extremely expensive. That’s when taking the contract hire route can be very useful. Essentially, it can save your business money.

Have a look at some of the other benefits:

• Costs are fixed ensuring maximum control for accurate monthly and annual budgeting
• This form of funding is considered to be “off balance sheet” and the vehicle will not be shown as an asset within the company’s balance sheet
• It is tax efficient, with up to 100% corporation tax relief on rentals proportional to vehicle purchase price
• A low initial outlay, usually 3 months’ advanced rentals
• Contracts available for periods of 2 to 5 years depending on the vehicle usage (although this is amendable)

UKVF is a privately owned vehicle finance and vehicle sourcing company and we have over 15 years’ experience in the industry. Give us a call today on 01257 267 036 for advice or a free contract hire quote.