A great advantage of car leasing is the potential to enable people to drive the cars they want, but can't necessarily afford to buy outright. This alone makes it a very attractive purchasing method for many individuals and start-up businesses wanting to make a positive, professional impression by driving an executive vehicle. Contract hiring also allows people to easily change their cars more frequently than through traditional buying and selling. This means that as well as being able to upgrade as your circumstances or preferences change, it's also possible to never drive a car that's more than 3 years old so you can benefit from having the manufacturers warranty to cover maintenance costs and never have the inconvenience or expense of needing to take the car for an MOT.

Personal Contract Purchase (also known as PCP) allows an individual to lease a vehicle for a defined length of time, with the convenience of paying a set amount per month. These monthly payments are calculated by determining the agreement length, mileage and the value of the vehicle once the contract has completed. There is an optional balloon payment that can be made at the end of the lease period, if you decide to purchase the vehicle outright, giving you the opportunity to 'test' the car for an extended period of time, to make sure it suits your needs. Alternatively at the end of the lease, the vehicle can be returned to the dealer and a new lease can be taken out on a replacement car. This allows you the flexibility to regularly change the make and model of the vehicle you drive and to hire a replacement with an increased range of specifications, if you wish. This sort of change over is not so easily affordable or accessible for people who buy their car initially, rather than choosing to lease one. As owner-drivers, they will also lose a lot of money due to depreciation if they regularly change new cars.

Lease Purchase is an affordable option for buying a hire vehicle at the end of a lease period. At the outset of the contract, monthly rental is calculated by considering the cost of the vehicle, the future value at a given date and the miles driven within the contract period. By making one final payment, equivalent to the future value at the contract end, made at that time secures the car to the leaser, who becomes the vehicle owner.

Off balance sheet funding

Under contract hire, your vehicles do not appear on your company's balance sheet as they are owned by the contract hire company. The removal of capital assets from your balance sheet can enhance a company's gearing (borrowing) ratio. Simultaneously, your business image can benefit from employee use of a high specification vehicle. If your business is in a strong financial position at the end of the lease period, you can choose to make the final payment for the outstanding amount of the guaranteed minimum future value determined at the start of the contract and add the vehicle to your assets at that time. If your company will be of more benefit without the ownership of the vehicle, you can return the vehicle and start a new contract on a replacement model of your choosing.

Reducing your Financial Risks

It is essential to manage the risks involved in running a vehicle fleet and by opting for contract hire you are able to do precisely that. Contract Hire enables you to simply pay the monthly fixed rental price and insure and fuel the vehicles. At the end of the lease period, a further lease can be taken out on new, replacement vehicles, reducing the likelihood of any being taken off the road for maintenance as would be ordinarily expected as they age and preventing the need to make good any wear and tear that would be expected with increased age and mileage of a vehicle. This ensures your fleet is always made up of top specification, high performing and excellent condition vehicles.

About the Author

Lease and Contract Hire Ltd presents hundreds of contract hire and leasing offers to customers throughout the UK through their search engine based portal website - http://www.LeaseAndContractHire.com.