Business Contract Hire (BCH)
Business Contract Hire (BCH)
More and more companies and business owners are looking at ways to save money and provide employees with better work benefits. One such benefit is business contract hire allowing staff to own a new car for a set period of time from 1 year to 4 years and make use of the ease of mind that comes with owning a car this way. These usually include items such as easy repair in light of damage, MOT’s taken care of and not having to worry about insurance.
The company who takes out the agreement does not actually own the vehicles so the car is simply returned when the agreed lease time period is up. This form of car leasing is one of the most cost effective and popular. Over 50% of new company cars are now funded by this method.
So how are the monthly payments determined? The business contract hire company will know the value of the vehicle being leased at the end of the contract you are wanting it for. This is known as the residual value, you may have to adhere to a mileage limit per year for this to be agreed. Then the payments you pay per month are worked out by deducting the lost value and you will pay the difference.
So what are the pros and cons of obtaining a car via this method? For the company if can mean low initial payments, and also only 3 payments up front to start the agreement. Fixed monthly costs so no rising payments at any point. The costs can be written off for tax. Your employees get access to the latest range of vehicles on the market, with an option to suit all tastes. You can free up capital as your business profit is not tied into a large fleet of self owned vehicles. Vehicle maintenance can also be included for even better piece of mind vehicle leasing. Even the road tax can be included. Finally it means you can enjoy hassle free motoring with almost every aspect of owning a car taken care of and included in the business contract hire.
So now to the cons. Well the main one is the mileage, you may have to agree on a set limit per year and if you go over this you can receive an additional charge. There won’t be an option to buy at the end of the agreement so you will never own the vehicle. Wear and tear is allowed on the car and is taken as standard with the life of the vehicle however any other damage might result in a charge.
The list of vehicles that are usually included in business contract hire can be quite extensive, with a wide range of vehicles available that cover all shapes and sizes from hatchbacks and 4×4’s to saloons and SUV’s. Obviously the vehicles will also be from the latest range and year so your employees can choose from the latest technology and vehicle models.
Business contract hire is the perfect solution if you want fixed cost motoring. Enabling a business owner to control what is usually their biggest expenditure.
Here at Coast2Coast we can advise and arrange your business contract hire. Helping you understand how it works and how it can benefit your company. We have access to the latest vehicles also and with the largest range of make and model of vehicles available your employees will find something that suits them.