Businesses Saved by Vehicle Leasing

Van leasing is currently helping many businesses to stay afloat during these difficult times. Many businesses have been forced to look carefully at their cash flow and capital expenditure. Van leasing provides businesses, large and small, with the commercial vehicles that they need with payment methods that they can afford.

Van leasing and contract hire have become increasingly popular as businesses recognize the benefits of leasing over outright purchase. These include:

• Fixed, known monthly payments enabling businesses to accurately forecast their finances;
• Low initial down payments mean that businesses can secure brand new, top specification vans for very little initial outlay;
• Maintenance and servicing can be included in the lease price which can save a lot of headaches;
• Leasing is a great way to lessen the impact of depreciation;
• The leasing company can often provide commercial vehicle insurance at very competitive rates;
• No problems disposing of vehicles at the end of the lease period;
• There are tax benefits to leasing as it is classed as rental which means that 100% of the lease charge is tax allowable.

Although van leasing is generally advantageous to businesses there are some additional considerations that should be borne in mind. One thing you may need to do is accurately estimate your anticipated mileage. You should always check to find out if there are any penalties for exceeding the stipulated mileage and maybe look for an unlimited mileage contract.

Another important aspect of the contract to consider is exactly what is included in the maintenance agreement. Some lease contracts include replacement tires and even replacement windscreens, but always check the details.

Always gather several quotations when shopping around for a good van leasing contract and compare them in detail. Be certain that you are comparing the same models of vehicles with all of the same options.

Like company car leasing, van leasing is increasingly recognized as a financially viable option for providing a business with the transport needed to stay in business.

Auto Leasing Provides Recession Lifeline

Many businesses traditionally support their transportation needs by purchasing vehicles from local dealers. Being local means that they are ideally located to support servicing and maintenance. Business will usually negotiate a significant discount due to the quantity of vehicles required and the ongoing business they will be providing to the supplier.

The current recession is prompting many businesses to look at alternative ways that they can provide and finance their transport needs.

Accountants and finance departments want to cut costs but, obviously, this must be achieved without any impact on the profitability of the business. Lots or businesses are rethinking the provision of company cars. Instead of providing their executives and sales people with their own dedicated company car, bought from the local dealer, many are turning to business car leasing arrangements. Some are choosing to use a car pool of leased automobiles that can be used by any member of staff who needs a vehicle.

It has been estimated that the leasing approach is saving businesses between 20 and 60% when compared to their previous transport costs.

The same approach has been adopted by many companies requiring commercial vehicles. Leasing vans and trucks is not new to business but was previously primarily used by larger organizations. Many business are resorting to automobile leasing as a way to cut their regular transportation costs during the current recession.

Businesses can really benefit from the many advantages that leasing provides over outright purchase. There are tax advantages for most businesses and the fixed monthly payments help accountants to budget their transport costs.

One of the main disadvantages is that the business never actually owns the vehicles which remain the property of the leasing company. Another potential disadvantage is that you must generally estimate the anticipated mileage and if this is exceeded significant costs can result.

If you are a business, of any size, you would do well to research how much you could potentially save and the advantages that vehicle leasing could bring to your business.

The car over the years

How far has car industry technology come in recent years? From being a luxury way back in the 1930’s to the cheap affordable way you can buy them now using car contract hire it is amazing just how far they have come.

One of the best ways I can talk about this is to use my knowledge of games. With this I am going way back to the days of the Super Nintendo Entertainment System. I could go back further but for me this was the first console I owned and will be much easier to cover the changes that have happened over the years. The first real driving game that I played was F1 pole position which was released in 1993 and at the time was an awsome game.

Four years later and a huge difference can be seen between the the last game and the newer version on the next Nintendo console. It is truly amazing to see the difference between the two games in such a short time period. The jump from 2-D to 3-D that took place during these two games is a huge leap in the technology. The next jump skips the next generation of consoles and forms itself onto the PS3 and Xbox 360 as some of the graphics on the driving games on these consoles are so realstic it is truly unreal.V.

Of course this hasn’t just happened in the gaming world, many things have been tried and failed or been made into a huge success over the last few years. The biggest and best in my opinion isn’t the amazing new Ferrari’s you see being released it is in fact the Hybrid car. The reason they are so good is that they save a hell of a lot on energy which is going to be pretty useful for when the oil runs dry. Some of the newer models of the Hybrid cars have system that powers the battery whenever you brake the car.

Of course not to be forgotten is the brilliant to shut the kids up, T.V in the car as well as heated seats to calm the Mrs down during a heated ‘you’ve got us lost’ argument.

The Hyrbid car is only going to increase in sales (after the recession that is) and will certainly be the car of the future, but for nowl, you need a car that is both decent and afforable. Leased cars can work out a lot cheaper? The Audi contract hire looks pretty good as well as being as little as £214 a month.

Contract Hire Explained

Car leasing, personal contract purchase, contract hire, lease purchase and car loans are all different ways to finance the cost of cars and vans. The variety of vehicle financing options available today can be confusing so I thought I would focus on ‘contract hire’ and explain how this technique works.

Leasing a car basically takes care of one of the biggest financial issues associated with acquiring a new vehicle which is depreciation. The value of your brand new car falls through the floor, even before you have driven away from your supplier.

When you take out a car lease the residual value of your selected vehicle is calculated. The is the estimated value of the vehicle at the end of the agreed lease period based on the anticipated mileage during this time. 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 vehicle financing method that has maximum benefit for customers who are registered for VAT, so it is most suitable for businesses and the self-employed. If your vehicle is used exclusively for business purposes you can reclaim 100% of the VAT. Even if your car 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 car leasing contract. You will not be surprised by any unforeseen disposal or depreciation costs.

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.

For cheap car leasing I recommend Nationwide Vehicle Contracts.

Second Hand Car Sales On The Up

Further drops in the production and sales of new cars are being reported all over the news, but the same is not so true for second hand cars. Some of the biggest names in the industry report healthy figures.

There is no arguing with the fact that the new car market is suffering. Redundancies have been announced at 70% of the major car manufactures as the supply and demand cycle grinds to a crawl. The prestigious national icon Bentley have announced redundancies last month. This move is clear evidence that it is not only bottom level car manufacturers seeing dwindling sales. Official figures show a 30.9% reduction in new car registrations in January as compared to the year previous according to the Society of Motor Manufactures. This drop is said to be the largest of its kind for over 30 years and the direction shows no signs of changing soon. 2012 has been the date suggested by many industry names that the new car market will see any increase in revenue.

The market for second hand card has not been hit so hard, in fact there have been suggestions that numbers are healthy. Two of the countries most well know auction houses, Manheim and BCA have come forward to state that they have seem some record numbers of cars being put up for bidding. BCA said that more cars and vans were sold throughout January 2009 than any previous year and cost of vehicles has risen for the last 3 months. A £300 average rise on last years figures have been estimated.

Van leasing and car leasing is also on the up it seems as the major leasers are reporting improving numbers this year. This is a likely result of people choosing to lease their vehicles during this economic downturn rather than commit to purchasing them outright. Out of all the countries in the UK car leasing in Cardiff has seen the biggest boost.

Last september was the last time that wholesale van prices saw an increase, but Manheim, the auction giant stated that numbers where up by £140 this month suggesting this market is doing well. Vehicles with four-wheel-drive have witnessed the most improved sales, with 6 months of increased sale figures in a row.

The best option, buy a car or lease a car?

Some people choose to purchase our vehicles and some of us choose to lease them. The question is which is best choice to take, car leasing or car buying?

Look upon a car lease as a long term rental. You do not own the vehicle and at the end of the lease you will then return it and pay any end of lease cost that is due, to complete your contract.

In contrast when you buy a car and pay for it with a loan, the car remains your property at the end of the loan period. If you then wish to buy a new vehicle it will be up to you to trade in or sell the old one.

Most new cars will lose their value as soon as you drive it out of the sales room! It also depreciates with age and as the mileage is larger.

Lease payments will cover just the portion of the cars value that you use during the time you drive it, the depreciation and not its complete cost. Finance charges are added on to your payment.

When buying a car with a loan you are liable to pay back its full cost, plus finance charges. Depending on your deposit or value of your trade in car, this can result in higher payments than for a lease, even if you get a long term loan.

At the end of the lease you may be liable to pay excess mileage fees. A maximum mileage is usually stipulated that you can drive during the lease period. It is policy that you would repay a charge per mile for every mile driven over that limit. However, you can often buy extra mileage at the beginning of the contract at a cheaper cost than you would pay for the extra mileage at the end!

Regarding damage to the car, the leasing company would naturally expect a degree of wear and tear. However the car will be inspected for any damage or extra wear and tear when it is returned at the end of the contract.
A fee would also have to be paid should you elect to end a vehicle lease early.

It is a misconception that the car lease firm takes responsibility for the maintenance of the car during the contract period. You will be responsible for the costs of maintaining the car, as if you owned it.
Warranty repairs will be honoured no matter who owns the vehicle. Usually you will find that lease terms end before a vehicle goes out of warranty.

The best way to try to get an idea as to the deal that would suit you best is to work out how much you would actually be prepared to pay to own a vehicle. Add up the payments you would make on the car and then compare that to the value when the payments cease. Vehicle ownership does not usually make money unless maybe when buying a classic car.

So, is it best to lease or buy?

Leasing:

A car lease might be best if you need a new car every two to three years.
You would obviously prefer to drive a new vehicle but cannot afford to to do so.
On average you drive 15,000 miles or less each year.
You would not be using the vehicle in such a way that it would cause excessive wear and tear.
You are not in a position to make a large down payment.
You use the car for business and can write off your lease expenses.

Buying:

You plan to pay off the car and keep it to avoid loan payments.
You are in a position to pay for repairs after the warranty period has passed
You put more than 15,000 miles a year on a car
You have credit issues and if this is the case it will be easier to buy than to lease
You may intend to exchange it in for another car in less than two years

The new captal allowance and its affects on the company car

From April 2009 it has been announced that there are new rules regarding tax relief on business cars. This could make quite a difference to the capital allowances and it may be more practical to change your car sooner than you had anticipated.

This Pre-Budget report details allowances for cars are based on the vehicles carbon dioxide emissions. The ones affected will be those acquired after the 31st March 2009 for companies and for sole traders and partnerships this will apply after 5th April 09.

After April it will only be cars with co2 emissions that are up to 160g/km that will attract allowances at just 10%. Therefore buy a vehicle before April and keep the higher rate of relief.

It is beleived that even the more upmarket cars with emissions up to 160 g/km may be a better proposition to buy now. At the present time if you are thinking about buying a car which costs more than £12,000 writing down allowances will be curtailed to £3,000 a year. However you are entitled to a balancing allowance when you get rid of it. Ultimately the complete capital cost of the car is allowed for tax in its lifetime.

These new rules will take off the £3,000 limit and the allowance. In the case of the expensive car which normally loses its value quicker than the rate of capital allowances, this will mean that there could well be a shortfall in allowances as in comparison to the cost of the car in its lifetime.

Under these new rules it appears that businesses that lease cars that are expensive should indeed benefit. The restriction on tax relief on lease rentals for cars above £12,000 will be replaced by 15% disallowance of lease rental payments on vehicles with co2 emissions that are above 160g/km. This will be regardless of their cost.