If a fleet of cars and vans is an essential part of your business operation or if you offer company cars to key members of staff as a recruitment and retention incentive, the cost of fuel, insurance, maintenance and repair and staff administration time soon adds up to be a considerable overhead.
If you currently purchase your company cars you are tying up company funds and have a rapidly depreciating asset sitting on your balance sheet.
At a time of economic gloom, with high fuel costs and levels of inflation business contract hire enables you to release valuable capital tied up in your company cars that you can put to more profitable use. If use of a new car is important to your company but ownership of the car isn’t, then you should consider business contract hire.
Business contract hire enables you to control costs
Business contract hire takes away the worry and trouble of managing your company cars. It offers predictable fixed-cost motoring for up to five years, with optional servicing and maintenance contracts included if required. You know exactly what your monthly outlay will be, so you keep tight control of your budget and can plan accurately.
Monthly payments with business contract hire are significantly lower than with conventional car finance, where the loan is repaid over a fixed term with any interest payments added. Business contract hire requires a minimum cash outlay, usually equal to 3 monthly rental payments in advance, followed by equal monthly payments (subject to VAT).
At the outset of the contract hire agreement the car’s value at the end of the agreement is calculated. This is the initial purchase price of the car, less depreciation for age, mileage and wear and tear. The difference between these two figures is the amount that you pay for the use of the car (plus any finance charges) simply divided by the number of months you require the car for: 12, 14, 36, or 48 months.
As you are basically paying just the deprecation costs on the car, business contract hire is an incredibly cost effective way to fund your company cars.
And with cars such as Mercedes-Benz and smart that hold their value well, contract hire can cost you less to run them than other makes.
So when you want to create the right impression with a new member of staff or a new customer a Mercedes-Benz is more affordable than you might have thought possible.
Business contract hire provides tax benefits
Business contract hire is a popular car funding option for VAT registered companies as they can reclaim 50% of the total payments made and all of the maintenance package costs (100% of VAT is recoverable on commercial vehicles).
Business contract hire is classed as an operating lease, which means that the cars do not show as depreciating items on your balance sheet. Rentals are classed as a revenue expense and are shown in the profit and loss account.
Business contract hire specialists
Call our car leasing specialists on 0844 375 3263 to find out if business contract hire is right for your company. We have many funding options available to suit your individual requirements.
Personal contract hire is available too. Call 0844 375 3263 for a quote on a Mercedes-Benz or smart.
Read about business contract hire here.
Read about personal contract hire here.
Browse our best Mercedes-Benz and smart contract hire and car leasing deals here.