MENTION the word lease and most people think of contract hire, where a rental vehicle is utilised then returned at the end of the contract.
When deciding how to fund your commercial vehicle, it is vital to deal with a leasing company that can offer different methods of acquisition, as contract hire may not actually be the best option for your business needs.
Ian Evans-Piper, managing director of small fleet leasing provider Leasewell, is passionate about ensuring that his team are fully trained in all areas of LCV finance options;
“Although our name does include the word ‘lease’, we do offer different options for clients for their commercial vehicles including contract hire, finance lease and low-rate, traditional hire and lease purchase.
“Not all businesses are aware of the differences between the contracts and the benefits and disadvantages, so we make sure that we qualify the customers’ needs and help them make the right acquisition choice in a very one-to-one, bespoke way.”
Quick Lowdown of commercial vehicle funding methods
Hire Purchase
- Fixed rate of interest and payments for the duration
- At the end of the agreement, your business owns the vehicle and any profit from the sale or part exchange of the vehicle
- Writing down allowances can be available
- Hire Purchase with balloon option is available to reduce monthly payments (Lease Purchase)
- The VAT deposit is reclaimable for VAT registered customers
- 100% of the interest charges can be offset against company taxable profits
Contract Hire
- Low deposit, with typically three monthly rentals in advance
- Fixed repayments for the term
- Rentals are 100% taxable against profits
- No part exchange or vehicle disposal issues
- Road Fund Licence is included
- Maintenance packages can be added to include services, repairs and tyres
- Vehicles are subject to an end of contract inspection, where reconditioning costs are charged back to the client – this is ideal for VAT registered larger fleets
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