Car Contract Hire

[missdetermination]

Hi does any one know how many years you have to be a ltd company to be able to apply for contract hire car?

 

[businessfunding]

You don't have to be limiter, or have ben trading for any time.

What will differ (quite significantly) is the deals that you will get - as a new start, expect to pay larger deposits, provide personal security and get less car for your money than you would as an established, profitable business.

 

[wevet]

Many of the features of contract hire are not especially favourable:

Most contract hire comapnies quote an attractive headline rate but the mielage allowances in those headline rates are normally very limited with a heavy penalty for additional miles.

If you take a with servicing agreement you most probably are paying way over the top for servicing.

You are stuck with that vehicle for the period of the contract hire (to get out can be very expensive). So if your circumstances change for better or for worse you are stuck with it.

At the end of the contract the vehicle is inspected by the rental company's assessors. Your idea of "fair wear and tear" is often vastly at variance with that of the rental company. You could get landed with a very nasty bill for "repairs".

An example I came across was a car which had never been damaged but for some reason during the 3 year contract period part of the paintwork had dulled and there was a clear difference in shading. This was clearly a problem dating back to the opriginal factory paintwork, however, the hire company insisted that this was an area of poor re-spray undertaken sometime during the contract period. The hirere was then presented with a big bill for a re-spray.

One of the arguements for contract hire and leasing was that these were "off balance sheet". My understanding is (accountants correct me if I am wrong) that leasing and otehr agreements to which you are committed should now be shown as long term libilities and are therefore detirmental to the look of your balance sheet.

You will probably incur tax charges for using the vehicle for private use.

One option is to buy a decent car (late used) and charge the company mileage.

The otehr option if you think that your circumstances might change is to go around normal rental companies and get quotes on long term hire which does not commit you to a specific period. Gives youflexibility to upgrade or downsize as circumstances require.

 

[Andy Alderson]

Many of the features of contract hire are not especially favourable:

Most contract hire comapnies quote an attractive headline rate but the mielage allowances in those headline rates are normally very limited with a heavy penalty for additional miles.

If you take a with servicing agreement you most probably are paying way over the top for servicing.

You are stuck with that vehicle for the period of the contract hire (to get out can be very expensive). So if your circumstances change for better or for worse you are stuck with it.

At the end of the contract the vehicle is inspected by the rental company's assessors. Your idea of "fair wear and tear" is often vastly at variance with that of the rental company. You could get landed with a very nasty bill for "repairs".

An example I came across was a car which had never been damaged but for some reason during the 3 year contract period part of the paintwork had dulled and there was a clear difference in shading. This was clearly a problem dating back to the opriginal factory paintwork, however, the hire company insisted that this was an area of poor re-spray undertaken sometime during the contract period. The hirere was then presented with a big bill for a re-spray.

One of the arguements for contract hire and leasing was that these were "off balance sheet". My understanding is (accountants correct me if I am wrong) that leasing and otehr agreements to which you are committed should now be shown as long term libilities and are therefore detirmental to the look of your balance sheet.

You will probably incur tax charges for using the vehicle for private use.

One option is to buy a decent car (late used) and charge the company mileage.

The otehr option if you think that your circumstances might change is to go around normal rental companies and get quotes on long term hire which does not commit you to a specific period. Gives youflexibility to upgrade or downsize as circumstances require.

That's one side of the coin

The other side is that if you want to pay a low deposit and relatively low paymenst as well as having a new car with all the benefits that comes with, ie Brand New, three year warranty and breakdown, low servicing costs reliability etc the contract hire is a great method. It gives you fixed cost motoring.
I accept that you have to be careful with condition but as long as you understand what is and isn't accepatabel ( and all leasing comoanies can provide you a detailed list of this ) then you can deal with it accordingly.

Now to your question.

pretty much all of the contract hire companies wil treat this differently.

As a rule though if you have accounts filed at comapnies house then you can do it in the company name, the very fact that you have the accounts filed can be enough to get through on credit core alone. It obviously helps if they show a profit (although not essential)
If they're not filed then management accounts can be good enough, they do have to show a profit as it will then be underwritten by a human rather than a computer using credit score.
As one poster has said being prepared to put in a higher deposit can also help, although not the be all and end all. Mostly it is three rentals in advance.

It also helps if you're prepared to provide a garauntee.But again not essential

As for tax , you will be classed as an employee soif you go for something with low emmissions, of which there is load of choice then the tax paid can be really low. One of my staff pays just £35 per month tax on her brand new company seat leon 1.6 diesel with 55MPG

You can only claim 50% of the rental back but 100% of the servicing cost/monthly payment.

It can be expensive BUT every vehicle needs judging on its own merits, there's lots to be said for a fixed monthly payments that includes everything including, road tax, servicing, repairs, tyres and a dedicated no for booking you in etc.


The other option if you are fairly new and there are no accounts filed or management figuires. Is, if you are fairly strong yourself from a credit core point of view wouled be to do a personal contract hire.

What you can then do is charge your own company 45p per mile for the first 10,000 miles p.a or in other words £375 per month.
So, if you take on a personal leased deal at say £170 +vat then (£204 inc) that will leave you £171.00 per month to cover insurance, maintinance and any other running costs .

Hope that helps

PM me if you need a quote

Andy

 

[Deleted member 127702]

You can only claim 50% of the rental back but 100% of the servicing cost/monthly payment.

Isn't that 50% of the VAT on the rental?

 

[Andy Alderson]

Isn't that 50% of the VAT on the rental?

Oops, yes of course that's correct, typing too fast and not proof reading.

 

[businessfunding]

Many of the features of contract hire are not especially favourable:

Most contract hire comapnies quote an attractive headline rate but the mielage allowances in those headline rates are normally very limited with a heavy penalty for additional miles.

If you take a with servicing agreement you most probably are paying way over the top for servicing.

You are stuck with that vehicle for the period of the contract hire (to get out can be very expensive). So if your circumstances change for better or for worse you are stuck with it.

At the end of the contract the vehicle is inspected by the rental company's assessors. Your idea of "fair wear and tear" is often vastly at variance with that of the rental company. You could get landed with a very nasty bill for "repairs".

An example I came across was a car which had never been damaged but for some reason during the 3 year contract period part of the paintwork had dulled and there was a clear difference in shading. This was clearly a problem dating back to the opriginal factory paintwork, however, the hire company insisted that this was an area of poor re-spray undertaken sometime during the contract period. The hirere was then presented with a big bill for a re-spray.

One of the arguements for contract hire and leasing was that these were "off balance sheet". My understanding is (accountants correct me if I am wrong) that leasing and otehr agreements to which you are committed should now be shown as long term libilities and are therefore detirmental to the look of your balance sheet.

You will probably incur tax charges for using the vehicle for private use.

One option is to buy a decent car (late used) and charge the company mileage.

The otehr option if you think that your circumstances might change is to go around normal rental companies and get quotes on long term hire which does not commit you to a specific period. Gives youflexibility to upgrade or downsize as circumstances require.

As a user of contract hire - 3 times, with 3 different companies - I haven't experienced most of these problems. In fact one vehicle went considerably over both mileage and contract term, and I was delighted with how low the additional charges were.

I sort of agree about the difficulty of chopping and changing, but guess that's just the nature of contracts.

The 'top end' of the contract hire market is very comeptitive and there are some good deals to be had; the 'non-perime' sector is less so, and it might well be worth buying second hand until you qualify as prime.

 

[RevaxMedia]

Hi does any one know how many years you have to be a ltd company to be able to apply for contract hire car?

We managed to get two cars when only trading for a few months.

 

[missdetermination]

Thanks for the replies, our accountant didnt seem to think it was a problem but for us but we have been turned down because we have 2 years instead of 3 years accounts (limited...next set due April). The guy at the car garage seems to want to steer us (no pun intended) down the personal route....just so frustrating!

 

[Andy Alderson]

Thanks for the replies, our accountant didnt seem to think it was a problem but for us but we have been turned down because we have 2 years instead of 3 years accounts (limited...next set due April). The guy at the car garage seems to want to steer us (no pun intended) down the personal route....just so frustrating!

I may be able to help with this, feel free to pm me if you want me to look into it for you.

 

[Andy Alderson]

Thanks for the replies, our accountant didnt seem to think it was a problem but for us but we have been turned down because we have 2 years instead of 3 years accounts (limited...next set due April). The guy at the car garage seems to want to steer us (no pun intended) down the personal route....just so frustrating!

If that's all that's holding things up I can probably help with a business lease, feel free to pm me if you need help.

 

[johnmatthew]

I am totally agree with [FONT=verdana, geneva, lucida, arial]Andy Alderson[/FONT], this is is the only one side of the car leasing.

If you see there is positive side also.
If you are short of money, you want to ride best and brand new car then car leasing is best option.
In car leasing you dong have headache of re-selling the car after 2-3 year...once the lease is up you can either continue with the same car or lease another brand new car.

Many of the features of contract hire are not especially favourable:

Most contract hire comapnies quote an attractive headline rate but the mielage allowances in those headline rates are normally very limited with a heavy penalty for additional miles.

If you take a with servicing agreement you most probably are paying way over the top for servicing.

You are stuck with that vehicle for the period of the contract hire (to get out can be very expensive). So if your circumstances change for better or for worse you are stuck with it.

At the end of the contract the vehicle is inspected by the rental company's assessors. Your idea of "fair wear and tear" is often vastly at variance with that of the rental company. You could get landed with a very nasty bill for "repairs".

An example I came across was a car which had never been damaged but for some reason during the 3 year contract period part of the paintwork had dulled and there was a clear difference in shading. This was clearly a problem dating back to the opriginal factory paintwork, however, the hire company insisted that this was an area of poor re-spray undertaken sometime during the contract period. The hirere was then presented with a big bill for a re-spray.

One of the arguements for contract hire and leasing was that these were "off balance sheet". My understanding is (accountants correct me if I am wrong) that leasing and otehr agreements to which you are committed should now be shown as long term libilities and are therefore detirmental to the look of your balance sheet.

You will probably incur tax charges for using the vehicle for private use.

One option is to buy a decent car (late used) and charge the company mileage.

The otehr option if you think that your circumstances might change is to go around normal rental companies and get quotes on long term hire which does not commit you to a specific period. Gives youflexibility to upgrade or downsize as circumstances require.

 

[bovine]

You do need to be aware of the dilapidations. Have had a few cars now, my last car (a mondeo) went back no problems. They collected it and that was that.
The audi a3 was a different matter. Someone came out from the lease co. and did a report onsite - my instinct was obviously this was a money making exercise. They were incredibly picky about even very minor things. The car had had a respray from a minor prang and he wasnt happy with that. Any way, the final bill came to about £900.

When we got the car, we did get a very good deal. My suspicion was that it was offered on such a good deal with the sole intent on charging lots at the end. I could be wrong, but thats my gut feeling on it.

Upshot is I dont intend leasing anything from VAG any time soon!