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
- 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
- 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
- Again, low deposit funding method with typically three monthly rentals in advance
- Fixed monthly repayments
- Clients can choose to reduce rentals by choosing the Finance Lease with a ‘balloon’
- Repayment periods available of up to 60 months
- VAT is paid monthly, then can be claimed back quarterly if client is VAT registered
- Monthly rentals are 100% allowable against taxable profits
- When the vehicle is sold or part-exchanged at end of the term, the hirer benefits from up to 100% of sales proceeds excluding VAT
- Finance lease is ideal for non-VAT registered businesses looking for low initial deposit and maximum flexibility
- Finance lease carries no official mileage clauses or penalties
Ian Evans-Piper continued;
“Not all leasing companies offer different methods of funding – there are many that only specialise in contract hire. We believe that customers should make an informed choice based on their circumstances and because of this, we have a steady stream of satisfied clients recommending us and also returning to us.
“In addition, we do offer car leasing and funding so for businesses looking for a ‘one-stop-shop’ for all of their fleet requirements – we are proud of being able to offer competitive deals and provide sound advice to anyone seeking an expert opinion.”