Leasing and Contract Hire explained
Vehicle Leasing
Vehicle leasing refers to leasing the use of a motor vehicle for a fixed or indefinite period of time. It is commonly offered as an alternative to vehicle purchase. The key difference in a lease is that after the lease expires, the lessee must return the vehicle to the dealer or buy it. All of the Leasing quotes on this site are based on the return of the vehicle, although in some instances, the option to purchase the vehicle at the end of the leasing term can be arranged.
Leasing offers advantages to both buyers as lease payments will usually be lower than payments on a car loan would be, and qualification is usually easier. Some consumers may prefer leasing as it allows them to simply return a car and select a new model when the lease expires, allowing a consumer to drive a new vehicle every few years without the responsibility of selling the old vehicles. A lessee does not have to worry about the future value of the vehicle, while a vehicle owner does.
Contract Hire
SGP Leasing offers Contract Hire for both the Business and Personal user.
Business Contract Hire (BCH) - is a vehicle finance method designed for maximum benefit for VAT registered customers – up to 100% of VAT can be reclaimed provided there is no element of personal use involved though 50% can still be reclaimed if personal use is required.
Personal Contract Hire (PCH) - is for consumers who are not VAT registered therefor no VAT can be reclaimed and all monthly rentals are quoted inclusive of VAT. However, the benefits of Contract Hire for both Business and Personal users largely remain the same.
The vehicle is hired for an agreed period of time, usually between 12 and 60 months and a fixed rental is paid based on the mileage. Contract Hire can include full maintenance to cover routine servicing, tyres etc. or can be for the hire on its own. At the end of the contract the vehicle is simply returned to the finance company with no vehicle disposal or depreciation risks or hassle.
Benefits include:
- Up to 100% of rentals can be offset against taxable profits (Business users)
- Minimum capital outlay is required improving cash flow
- Full maintenance to cover routine servicing, tyres etc (optional)
- No vehicle disposal or depreciation risks or hassle
- Fixed monthly rentals allowing for more accurate budgeting
- Road fund licence and breakdown cover are included and full ongoing support is provided
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Checklist
- 12 months road tax
- Full manufacturers warranty
- Free UK mainland delivery
- Maintenance options
- Roadside assistance
- Replacement vehicle
- Flexible contract terms