Leasing a van on a contract hire agreement
There are a number of different ways to finance a deal on a new van which include: van lease, personal contract purchase, van contract hire, lease purchase and van loans. Many people are confused by the differences in these financing options so I thought I would focus on 'van contract hire' and explain how this technique works.
Leasing deals with one of the biggest issues associated with the acquisition of new vehicles and that is depreciation. As soon as you've been handed the keys to your brand new motor its value falls through the floor.
When you take out a van lease the residual value of your chosen van or van is calculated. This is the estimated value of the vehicle at the end of the agreed lease period, usually 2 or 3 years, based on your expected mileage in that period. This calculated residual value is then deducted from the manufacturers retail price and the remaining sum is divided up into monthly payments that you will pay over the lease period. So the higher the residual value in comparison with the current value, the less you will be paying each month.
Contract hire is a popular vehicle financing technique that isparticularly beneficial for customers who are registered for VAT such as small businesses and self employed people. If your vehicle is used exclusively for business purposes you can reclaim 100% of the VAT. Even if your van or van is used for some personal use you can still reclaim 50% of the VAT.
In a contract hire agreement you actually hire the vehicle for an agreed period, usually for between 12 and 60 months during which time a fixed rental is paid, based upon the mileage. You will return the vehicle to your supplier at the end of your contract hire period, much the same as a van leasing contract. You will not encounter any painful surprise disposal or depreciation costs.
Van Contract hire will generally include full vehicle maintenance which can optionally include routine servicing and even replacement tyres. Up to 100% of the rental charges can be offset against taxable profits and minimal capital outlay is required.
It's no surprise that contract hire is the favoured vehicle financing option for many businesses and self-employed people.
I am often asked whether these types of deals are extended to pick up truck leasing or small van leasing, as opposed to just van leasing. The answer is yes, with competitive pricing available from Mark Williams.
For commercial van leasing I would recommend Mark Williams Vehicle contracts.
Tags: cheap van leasing, commercial contract hire, commercial van leasing, commercial vehicle leasing, pick up truck leasing, van contract hire, van lease, van leasing