CONTRACT hire – what a great way to drive a new car!
Whether you take out a business car lease through the company (monthly lease ex VAT) or a personal lease (monthly lease inc VAT), you benefit from driving a new car at competitive monthly rates.
But before you sign the finance papers – make sure you know what you’re signing up to.
1) It’s not yours. It always belongs to the leasing company that’s financing it.
2) Know the term. Most car leases for small businesses are usually over a three year/30,000 mile period. But three years isn’t quite what it seems, so make sure you understand the terms (or ‘profile’): most are usually 3 months in advance, followed by 35 monthly payments. If you go over the total mileage, there will be an excess mileage charge – know what this is.
3) Fair wear and tear. As we’ve said, it’s not yours. When the leasing company wants the car back they expect it in a decent state so they can sell it – called fair wear and tear. If you’re not good at looking after cars, contract hire may not be for you – or get ready for refurbishment charges.
4) Maintenance. Do you need it? Probably not. Maintenance covers all servicing, tyres and so on. If you’re not a high mileage driver, and 10,000 miles a year isn’t, don’t bother. That doesn’t mean you mustn’t get the car serviced.
5) The lease is for the period. If you think your circumstances might change and you need to break the contract, the penalties can be severe. Just be aware of this.
So is business car leasing for you? If you understand these five basics, then sign the finance and go out and enjoy that car.
And remember, in three years time, you can start all over again in a brand new business car.
And how good is that?