If you are looking for ways to save money for your business – and which business owner isn’t? – then you have a lot of options in terms of money-saving strategies. But if you also need vehicles for your enterprise, especially in terms of a fleet, then you are probably thinking about vehicle leasing or contract hire. The thing with contract hire or vehicle leasing is that it comes with a lot of perks – one of which is saving on your expenses. But what else can you expect from these kinds of agreements? In other words, how can your business really benefit from contract hire or leasing agreements? Here’s your best guide.
- The initial payment is lower
One of the biggest advantages of contract hire or leasing is that the initial payment is lower. This means you don’t have to shell out too much of your hard-earned profit just to get the vehicles you need. In essence, you are simply ‘renting’ a vehicle for some time, say, two years to four years, and you will be paying a set amount for use of that vehicle each month. The initial upfront cost is minimal, especially when compared to purchasing a vehicle because you often just need to pay two to three months’ equivalent of the rental fee for the deposit. It’s a cost-effective alternative to vehicle purchase, and it leaves you with the necessary funds you need for other expenditures.
- A consistent amount of payment per month
Another advantage of contract hire and leasing agreements, such as the ones offered by Diamond Contract Hire, is that you don’t have to deal with changing or fluctuating monthly payments. The payment per month is usually laid down up-front, and it will remain fixed during the entire duration of your agreement. This enables you to plan your expenses and budget more efficiently.
- No need to worry about depreciation
You don’t need to be concerned about depreciation either, because the vehicles will not belong to you in the first place. If you purchase your own vehicles or vehicle fleet, you could very well end up with a depreciation of as much as 60% of the vehicles’ value in three years of ownership. This amounts to a lot of money lost once you have to sell them later on. But with a contract hire arrangement, vehicle depreciation isn’t your problem – the depreciation is taken on by the leasing provider and any depreciation down the line will not affect your agreement. At term’s end, you will simply hand them back the vehicle transport and then have the option to go for a new contract on a new vehicle.
- A good way to reclaim your business’ VAT
It’s also a good way to reclaim your business’ VAT, which makes it an entirely suitable option for more businesses. If you have a business that’s VAT-registered, it will be easy to reclaim your business’ VAT – and you can reclaim up to a hundred per cent of your VAT if your vehicles are used only for business. And even if you use it for both personal and business purposes, you can still reclaim up to 50 per cent of your VAT.
With leasing, you will always have well-maintained, relatively new vehicles, which gives customers a better impression of your enterprise as well.
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