subject: Contract Hire Leasing For Business - A Wasteful Luxury Or Simply Common Sense? [print this page] Automobile leasing is usually perceived as a luxury for those businesses that 'can afford it'. This image could be very misleading, however, as vehicle leasing is usually designed as a manner of saving money.
Firstly, the monthly payments on a car lease will typically be far less than those required through finance to purchase the vehicle. This is because lease payments will largely reflect the anticipated depreciation of the automobile in the course of the lease period rather than its original purchase price. Even if a business were to go for a second-hand car, the possible increase in upkeep and garaging costs, along with MOT fees (to not point out the incalculable loss of business should a car break down), can still make leasing a brand new vehicle appear a far more inviting proposition.
Secondly, some types of car leasing payments could be offset against taxable income, whilst VAT-registered companies can typically claim back VAT.
Thirdly, though some leasing schemes require the automobile to be handed back on the finish of the contract period this can sometimes be a blessing to many businesses. There isn't any danger of being saddled with a depreciating asset that is hard to dispose of.
However, some automobile leasing options that let the purchase of the car after the lease contract has expired could be to a enterprises' benefit if the purchase price, predetermined on the outset of the arrangement, turns out to be lower than the precise resale value. For some companies reliant on specialist vans, like those with refrigerated sections or those with extra long compartments (designed to carry items such as carpets), van leasing has proven to be an advantage.
Specialist vans may be very expensive to buy new. However, attempts to locate specialist models on the second-hand market can be fraught with difficulty. There may be also the hazard that poorer reliability will put deliveries in danger, a particularly thorny issue with time-sensitive items such as perishables.
Van leasing however will, firstly, take the headache out of tracking down the most applicable vehicle. An excellent automobile leasing company will have a powerful relationship with many main manufacturers and dealers and there should not be any restriction on finding the right vehicle. This will even extend to be able to choose a preferred colour from the manufacturer's full range. Also, though the leasing firm will have the ability to present a business with brand new, top quality vans, there'll generally be far less capital outlay required than if the van were to be purchased. This is because monthly van leasing payments are primarily based on the anticipated depreciation of the automobile during the contract period rather than on the automobile's complete original value. Although the van isn't owned by the business throughout the period of the lease, it would nonetheless enjoy sole access to this vehicle.
