Knowledge Bank
Business Vehicle Leasing
Commercial & Business Vehicle Leasing: What is it & how do I do it?
Business contract hire (business vehicle leasing) is a way of leasing vehicles to commercial organisations of any size. Many businesses are turning to contract hire as a cost-effective way to procure vehicles for their company.
Benefits of business contract hire
How does Business Contract Hire work?
Once you’ve selected a vehicle you’d like to lease, you’ll pay an initial fee (the initial rental) followed by regular monthly rentals over the course of your lease agreement. The fee you pay per month is usually determined by the car spec, plus your annual mileage (i.e. a top spec model with higher annual mileage will likely result in larger monthly payments).
At the end of your contract you’ll return the vehicle to the finance company. Because you never own the vehicle (the finance company does), you don’t need to worry about the depreciating value of the vehicle.
You’re then free to take out another vehicle lease. In some instances, depending on approval from your provider, you may also be able to extend your existing vehicle contract.
At the end of the lease period, can I keep the vehicle?
No, not with business contract hire. You won’t own the vehicle, it will remain the property of the funder/finance company. This is why the vehicle has to be returned at the end of your business contract hire period. There are other finance options, such as business contract purchase and business lease purchase which include the option to purchase the vehicle at the end of the term.
Other considerations with business contract hire
Here are answers to some of the most commonly asked questions from our business lease customers:
Green Cars’ is the term used for zero, low and ultra-low emission vehicles (ULEVs) - with pressure being applied to lower global emission levels, the need for “eco-friendly” vehicles is on the rise. Many countries now have plans in place to abolish the use of combustion engines before the turn of the century and so more and more vehicles we see on the roads will be Electric, hybrid or very low emission petrol and diesels.
Although beneficial to the environment, ‘Green Cars’ are also beneficial from a taxation view. The lower a vehicle’s emissions banding, the lower the taxation placed against it. Many manufacturers have tapped in to this ever-growing market with their own offerings, however, Volvo were the first manufacturer to state that every one of their models will be either electric or hybrid options from 2019.