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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

You don’t have to worry about vehicle depreciation
Tax benefits: the fixed monthly costs for your vehicle(s) are not seen as an asset on your balance sheet and you can claim at least a portion of the VAT back (if you are VAT registered)
Business contract hire can be used to free up capital which can then be invested back in your company

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:

Mileage: There will be additional charges if you go over your agreed annual mileage limits, so it’s important to set a realistic estimate of your annual mileage when initially discussing your business leasing options.
All van manufacturers now run Euro 6 engines in their vehicles so Co2 emissions should not affect your lease (unless you are travelling in and out of London or other Low Emission Zones).
The initial rental you’ll need to put down will vary depending on the type and size of vehicle, the length of your lease and annual mileage.
Contract lengths vary from 24 months to 60 months and can often be extended if needed.
Your Road Fund Licence is included in your monthly rental on business contract hire.
For van business contract hire, you may have specific requirements for your vehicle, e.g. pipe bars or wheelchair access. The cost of these customisations can usually be added in to your contract, or paid for separately.
Finance companies will charge for damage that falls outside the BVRLA’s (British Vehicle Rental and Leasing Association) Fair Wear and Tear Guide. This is typically paid for at the end of the lease when you hand the vehicle back.
You can insure your business vehicle under your company insurance (as long as your lease is in your company name) and your staff can be added to your insurance so they will be able to drive the vehicles too.
Private/company number plates can be used on lease vehicles, however, there may be a small charge to change these over.

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