Truck lease
Truck Lease

Truck Contract Hire

For all types of businesses across the UK, truck contract hire is the way to go when considering whether to lease or purchase a new vehicle. It has several advantages over purchasing outright and very few drawbacks.

Some of the benefits of truck contract hire are as follows:

  • Tax Benefits: VAT registered companies can claim 50% of the VAT for the finance portion of the contract if the vehicle will be used for business and personal use, 100% if business only. If you enter into a contract which provides for maintenance services, the service element of the VAT is also recoverable.
  • Off Balance Sheet: The contract hire does not need to be listed among your assets, clearing the way for other items that need to be financed and avoiding potential credit problems.
  • Improved Cash Flow: Since the business does not need to expend a large amount of cash at once, cash flow is generally much greater than it would be if a truck was purchased.
  • Fixed Interest Rates: With a truck contract hire, you pay a fixed interest rate which is set at the beginning of the period and cannot be changed. This is particularly important now, with interest rates likely to rise within a year.
  • No Depreciation: Commercial trucks can depreciate fairly quickly, but as a lessee, you wonít be responsible for the eventual trade or selling of the vehicle.
  • Budget Accuracy: Truck contract hires allow your company to breathe more easily about its budget, especially if the contract includes service. In this case, there are no potential budget pitfalls such as emergency vehicle repair to contend with.
  • No Maintenance Worries: Contracts with service include all maintenance over the life of the lease. This can include everything from tire pressure to the exterior paint job. Even though full service contracts typically include just about everything, be sure to check that there are no circumstances unique to your company that wonít be covered.
  • Support from Qualified Professionals: If you have any problems with the vehicle or questions about its operation, you have someone to turn to, usually 24 hours a day.
  • Breakdown Protection: If your vehicle should break down, many truck contract hire packages offer breakdown coverage. Some will even provide you with an emergency vehicle while the other is repaired.
  • GAP Coverage: Some contracts have provisions to cover the gap between the outstanding finance charges and the value of your vehicle as determined by your insurance company. Though this is only a problem if the vehicle is declared a write off, it can add additional peace of mind to a truck contract hire.

Unless youíre a well-established company with a large amount of capital, a truck contract hire is the best way to go when adding a vehicle to your fleet. Between tax and capital advantages and vehicle operation benefits, itís generally accepted that truck contract hire is the most prudent course of action for the vast majority of small to medium enterprises.

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