Commercial leasing is a hugely popular way of getting a van and is becoming ever more popular. But what is commercial leasing? And, how does it work?
In this article, we look at what commercial leasing is, how it works and the pros and cons.
The general definition of Business Contract Hire is where an asset is leased to someone, in this case, a business, for a set period of time. The Lessor is the person who leases the asset, the Lessee is the person who upholds specific obligations as defined in the lease agreement. In the context of vehicles, Business Contract Leasing is an agreement in which the leasing company, the Lessor, provides a business with a car, the asset, to a business, the Lessee. When we talk about Business Contract Leasing, we are referring to Business Contract Hire, which is just another name for it.
To buy or not to buy. That really is the question here. If you simply can't decide between fleet leasing versus buying then this article is especially for you. It can be a tough decision but as ever, your friends here at OSV are here to help by rounding up all of the key considerations when looking at fleet leasing versus buying.
Like any good versus article, we'll kick off with the pros of each.
While purchasing a fleet vehicle may seem expensive it does have some benefits. That being said, when purchasing multiple fleet vehicles you’ll find cost savings if you are not buying them all in one go. In the automotive industry, this is known as fleet purchasing. In recent years fleet dealers have been incentivising on fleets upwards of 3-4 cars but discounts used to only qualify on fleets of 10 cars or more.
The cars are an asset within the business which helps with your accounts and the strength of your balance sheet. It can be re-sold to gain some funds into the business. Owning your vehicle's gives the business some level of control and flexibility. Enabling you to dispose of them whenever you like, Maintaining the vehicles and the condition of them is also down to your discretion.
Contract hire describes leasing a vehicle for a set time period. It offers flexible motoring for a fixed low monthly fee. It's becoming increasingly popular with people who don't want the hassle of selling on the vehicle at the end of their contract or the worry of depreciation. There are two types of contract hire. Personal contract hire (PCH) and Business contract hire. The only real difference between the two is that the business contract hire allows the VAT to be claimed back.
Contract hire and contract purchase are very similar so it's easy to see why this features as one of our most frequently asked questions. There are some fundamental differences which we'll detail in this article. When deciding which lease option is best, it's essential to have all the information. Then, finding one that best suits your needs will be easy. You're welcome!
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