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A Short, Comprehensive Guide to Leasing Business Fleets

by Frank (writer), , April 27, 2014

Here are some of the most common lease types available

A large majority of transport-heavy businesses are moving towards leasing business fleets as a great alternative to an out-right purchase. With low initial payments and pre-determined, fixed payment terms, leasing offers businesses far greater control in terms of cash flow and budget, as well as giving their employees choice and flexibility as far as their vehicle is concerned. Here are some of the most common lease types available, and who they best suit.

Contract Hire

Contract hire is by far the most widely used form of fleet leasing in today's market. With this approach, the vehicle or vehicles are leased to your company for a set time and agreed mileage limit, in return for an initial up-front cost (usually a few months) and a subsequent monthly charge. Following the end of the lease, the vehicle will be returned to the leasing company, unless of course your business wishes to continue to the lease for a period. Why is this approach so popular? The main reason is that contract hire eliminates all of the chief risks associated with vehicle ownership, such as servicing costs and depreciation. Not only that, but a contract hire does not need to be shown as an asset in your company's financial paperwork, meaning that you can offset some of the rental charge against taxable profits.

Finance Lease

A finance lease involves paying either the total cost of the vehicle over an agreed timescale (including all interest charges), or paying lower monthly rentals with a final payment based on the estimated resale value of the car or van. The chief advantage of this approach is that the user has the freedom to decide on a fixed cost for the vehicle. On the downside though, they'll take on all the administrative tasks and operating risks that would not be their responsibility in a contract hire situation (maintenance costs, repairs, depreciation).

Talk To The Experts

Essentially, the type of lease that you decide to run with should depend entirely on your financial standing and how you plan to use the vehicles. There are notable risks associated with both approaches though, so it is highly advisable that you speak to an expert at Maxxia, before making any final decisions regarding the hire of your business fleet.

About the Writer

Frank is a writer for BrooWaha. For more information, visit the writer's website.
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