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Contract HireContract Hire is an ideal product for companies who don't want the financial risk of running their own car and commercial vehicle fleets, and who are looking to reduce the administrative burden of buying, servicing and disposing of their vehicles. |
You supply the customer a vehicle and introduce Business Partner as the funder. Your customer simply hires the vehicle from Business Partner for a pre-determined period at a fixed monthly rate. Business Partner retains ownership of the vehicles - and the risks associated with them - and at the end of the contract they are returned to Business Partner.
The key benefits of Contract Hire to the business user are:
Off balance sheet funding
Under Contract Hire vehicles do not appear on your customer's balance sheet as they are owned by Business Partner. The removal of capital assets from the balance sheet can enhance a company's gearing (borrowing) ratio.
Fixed monthly cost
A fixed monthly payment is charged over the life of the contract and the initial up front payment is normally just three months rental. Fixed monthly costs for the period of the contract makes budgeting much easier. In turn more accurate budgeting improves your customer's cashflow.
VAT Benefits
Contract Hire has many VAT benefits in that Business Partner can claim back the VAT on the purchase price of the new car. That means we pass on these benefits to our customers. Once the vehicle is on the road, customers can then claim back 100% of the VAT on the servicing element of the rental cost and 50% of the finance rental cost.
Reducing your Financial Risks
Managing the risks involved in running a vehicle fleet is all important and that's exactly what can be done with Contract Hire. Business Partner takes all the risks involved in everything from residual values and maintenance to interest rates. That leaves the customer to simply pay the monthly Contract Hire costs, insure and fuel the vehicle.
Reducing administrative hassles
Business Partner work closely with the entire dealer network to organise the supply, service and disposal of your customers vehicles. As a result, administration for the fleet operator is kept to a bare minimum.
What if my customer purchases its current fleet?
We have substantial experience in assisting our customers through the transition from more traditional funding methods to Contract Hire. This can be achieved by allowing us to purchase the current fleet, at an agreed price, immediately enabling your customer to take advantage of the financial and administrative benefits outlined on page 2, for a fixed monthly rental.
