Regardless of the size of your business, commercial vehicle management can be complex and costly. While buying cars outright may seem like a straightforward option, ongoing maintenance, repairs, and disposal issues can cause further administrative issues for businesses.
The solution? Contract hire provides a simple, cost-effective model that gives employees access to company vehicles without the burden of ownership.
Contract Hire: What Is It?
Business contract hire, also known as business leasing, is a fixed-term vehicle agreement that typically lasts between one and five years. Unlike purchasing corporate vehicles, businesses can pay a set monthly fee to lease them for an agreed period, and they are returned at the end of the contract.
Contract hire often includes essential services like road fund licensing, as well as adding maintenance plans to cover servicing, tyres, batteries, and more. This allows your company to keep running costs down while protecting valuable assets in the process. Contract hire also gives businesses the flexibility to access reliable, modern vehicles without the need to tie capital into depreciating assets.
The Advantages of Contract Hire
A contract hire car can provide numerous benefits for your organisation when compared with purchasing a vehicle altogether. Here’s why you should consider contract hire:
· Fixed monthly costs – Easily manage, plan, and stay on top of finances with simple, regular fixed costs.
· Flexible lease terms – Choose a contract length and package that meets your unique requirements and budgets.
· Avoid disposal worries – Experience a no-fuss, straightforward close to your contract by simply returning your vehicle at the end.
· Cost-effective options – Without the need for car ownership, you won’t be troubled by the vehicle’s value depreciating over time.
· Pain-free administration – Benefit from simplified admin, with less paperwork than owning a company vehicle.
Ultimately, contract hire offers flexibility and clear financial benefits. This makes it an ideal solution for small and medium-sized businesses, where cash flow management is essential.
What to Expect with Contract Hire Leasing
While contract hire can be a simple and cost-effective solution, there are several things that businesses should consider and understand before entering into an agreement. Here are just a few of them:
Mileage Allowance
There is typically an annual mileage limit that is agreed between the leasing company and the organisation at the start of the contract. Companies that underestimate their annual usage will be subject to further fees, while those that overestimate will pay for more than what they are using. We recommend that companies choose a mileage limit based on their regular usage.
Contract Length
The majority of contract hire agreements last from one to five years, and so it’s important to consider how long you’ll need the vehicle for, as this will affect the cost of monthly payments.
Maintenance Packages
Depending on the leasing company, businesses can benefit from a range of maintenance packages. This can cover the cost of servicing, tyres, and general wear and tear. As it is spread over a longer period, it is often cheaper than paying for ad hoc services in one lump sum.
Tax Advantages
In certain instances, company cars are a deductible expense. This makes them incredibly efficient for businesses, providing great tax advantages. Also, businesses using contract hire don’t have to worry about Vehicle Excise Duty, AKA road tax, as it is included in all regular payments. With the leasing company owning the vehicle, this makes contract hire even more stress-free.
End of Contract Terms
At the end of the contract, you will be required to return the vehicle to the leasing company, and this will need to be in line with fair wear and tear standards. Ensuring that your employees understand this requirement throughout the hiring period will prevent unexpected costs once the contract ends.
Why Choose SSD Hire?
At SSD Hire, we have specialised in making contract hire simple and easy for our clientele, which extends to local businesses, small, medium, and large companies, local authorities, the NHS, schools, universities, colleges, sole traders, and partnerships.
We help you find the right car and car hire package for your business and employees with tailored vehicle solutions. And when you choose us, you get fixed monthly budgeting, road fund licensing included, optional maintenance cover, replacement vehicles during downtime, and dedicated support and expertise throughout your contract.
With our services, we provide smart and cost-effective solutions that free up your time and resources to allow you to focus on running your business effectively.
Get in touch with our team today to start your contract hire journey.