Financial Benefits Of Vehicle Leasing

A lease purchase is a written hire purchase agreement affording you with the same protections given by the consumer credit act. If you feel the vehicle is worth less than the guaranteed minimum future value (GMFV) determined at the start of the lease, you can decline the option to buy the car and simply return it at the end of the rental period. If the GMFV is more than was estimated, you pay the outstanding pre-agreed final payment and if you wish, can part exchange the car — now under your ownership — and recoup the profit in the difference above the GMFV. Keeping the car in excellent condition and below the pre-agreed mileage, will benefit it’s future value as this is determined by the level of wear and tear of a vehicle given it’s age and mileage.

A great advantage of car leasing is the potential to enable people to drive the cars they want, but can’t necessarily afford to buy outright. This alone makes it a very attractive purchasing method for many individuals and start-up businesses wanting to make a positive, professional impression by driving an executive vehicle. Contract hiring also allows people to easily change their cars more frequently than through traditional buying and selling. This means that as well as being able to upgrade as your circumstances or preferences change, it’s also possible to never drive a car that’s more than 3 years old so you can benefit from having the manufacturer’s warranty to cover maintenance costs and never have the inconvenience or expense of needing to take the car for an MOT.

Motor vehicles are one of life’s status symbols. They can affect the way we feel as drivers and the impressions we make on those we pass. They also serve a very functional purpose, getting us from door to door, in comfort, safety and with all our daily supplies too. Almost every business that has any direct dealings with customers and suppliers can benefit from having use of a car or van, but it’s always the case that these businesses should buy their vehicles outright. For individual people, the decision of whether to purchase a car in the traditional sense is no longer so easily made. There are now many alternatives to buying that can prove a much better decision, not only saving money, but just as importantly saving time as well. The availability of these options is not restricted to those looking for transport solely for business use, but can also be applicable to people obtaining a car for personal use.

Off balance sheet funding

Under contract hire, your vehicles do not appear on your company’s balance sheet as they are owned by the contract hire company. The removal of capital assets from your balance sheet can enhance a company’s gearing (borrowing) ratio. Simultaneously, your business image can benefit from employee use of a high specification vehicle. If your business is in a strong financial position at the end of the lease period, you can choose to make the final payment for the outstanding amount of the guaranteed minimum future value determined at the start of the contract and add the vehicle to your assets at that time. If your company will be of more benefit without the ownership of the vehicle, you can return the vehicle and start a new contract on a replacement model of your choosing.

Reducing your Financial Risks

It is essential to manage the risks involved in running a vehicle fleet and by opting for contract hire you are able to do precisely that. Contract Hire enables you to simply pay the monthly fixed rental price and insure and fuel the vehicles. At the end of the lease period, a further lease can be taken out on new, replacement vehicles, reducing the likelihood of any being taken off the road for maintenance as would be ordinarily expected as they age and preventing the need to make good any wear and tear that would be expected with increased age and mileage of a vehicle. This ensures your fleet is always made up of top specification, high performing and excellent condition vehicles.

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