Contract Hire Deals

Business Contract Hire vs Personal Contract Hire

Motor Mistress Opinion

Business leasing and personal leasing are now two of the most popular forms of funding here in the UK for new cars.

It wasn’t too long ago that leasing was for businesses. It wasn’t usually seen as an option for individuals.

But in recent years, the tide has been changing.

Mainly due to the personal taxation implications that go hand-in-hand with running a company car, more and more people are taking the bull by the horns and leasing their car personally.

Why Lease Personally?

If you are looking to take on a new car – that comes with the obvious benefits of lower running costs than a used car – then leasing is a great way to keep the monthly payments down.

Now that people are finally starting to get their head around leasing as opposed to buying, there are some very competitive contract hire and PCP deals that – in many instances – can even outweigh the depreciation compared to buying a car outright or on finance.

Although you don’t have to be a business user to choose to take on a personal leasing option, there are many business owners and company car drivers who are choosing to take the personal lease route.

Business owners

Business owners, who may often have larger, more expensive cars, can save on benefit in kind tax in a big way by taking on a car themselves. After all, BIK is calculated according to a combination of list price and CO2 emissions, so the more executive cars tend to come with the highest benefit in kind annual tax bill.

They can still claim 45 pence per mile for business mileage expenses up to the first 10000 miles (25 pence thereafter) or if they are self-employed, they have the option of claiming back a portion of their running costs.

Beating Depreciation

Like I said earlier, it is often the case that leasing a new car from a reputable company can save you money – and not just on the monthly lease cost. In many cases, the rental of the vehicle will work out cheaper than the overall depreciation that you would stand to lose if you bought your car outright.

This is because leasing companies will buy in bulk; in many cases, the discounts are passed back to the lessee. In addition, there are often manufacturer and/or dealership incentives that help to make the deal stack up even further – there are also often pre-registered stock cars that have large additional discounts thrown in to the pot.

Business Contract Hire vs Personal Contract Hire

Whether you choose to go the business leasing route or personal contract hire route, it is always best to compare your options on an overall cost basis. Simply calculate all the rentals and make allowances for the tax implications and also the vat reclamation (you can claim 50% of the VAT back on the rental of a contract hire vehicle through a VAT registered company and 100% of the maintenance element).

In most circumstances, it also pays to take a peek at how much ownership is likely to cost you. In many cases, by the time you have taken the larger deposit, higher monthly repayments and worked out the likely depreciation, leasing your vehicle is a no-brainer.

But everyone is different and every circumstance warrants an individual approach.

For advice and guidance on your next vehicle – no matter how you choose to fund it – it is wise to speak to a company who specialise in all forms of funding. Compass Contract Hire Limited can steer you in the right direction however you decide to fund your car – contact them on 02392 228070 or click here for a free of charge call back.

Debbie Motor Mistress Blog, Top 10 Car Depreciation Facts