Online Calculator | Contract Hire For The Fleet Manager

Contract Hire For The Fleet Manager

It’s getting more expensive to run a fleet of vehicles by the day.  The VAT increase to 20% as of next year will be accompanied by a rise in Insurance Premium Tax (IPT) to 6% in January, which will increase the cost of warranties and motor insurance.  Factor in increases in fuel costs and it’s no wonder that many fleet owners are constantly reviewing the best way to keep on the road!

Car leasing has many advantages for the Fleet manager.  It allows you to fix your maintenance costs and avoid the unpredictability of considerable expense on what could be an extensive fleet of cars, vans and trucks.The latest cars tend to have generously extended service intervals, so what attention they do need can be built into the contract to include maintenance.Fleet managers can also ignore depreciation issues.  Any car, no matter how up market, is an asset that will depreciate over time.  That as true of Audi car leasing as it would be with Ford or Skoda contract hire.  The cost of depreciation is fixed at the start of the lease term in the monthly payment  and when the vehicle returns to the leasing firm (usually after 36 months)  its continuing decline in value is deferred back to the  leasing company.

Contract hire doesn’t require huge up-front costs or capital outlay.  Typically the monthly payments on something like BMW contract hire are also usually lower than loan repayments because you are not paying for the entire cost of the car, you are just paying for the use of it over 36 months.  This allows a business to free-up capital.Buying a vehicle means tying up cash-flow in a fixed, depreciating asset.   That capital can be released by selling whatever vehicles you own and leasing instead at a fixed, monthly cost. Contract hire is also a very tax efficient method of acquiring a new vehicle, giving access to write down allowances enabling a percentage of their monthly rental costs to be written off against company profit.

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