Equipment Contract Hire allows you to have all the benefits of having new equipment over an agreed period of time and mileage. This gives you cost-effective access to new equipment and none of those large drops in value normally associated with owning a new vehicle outright. You also have peace of mind that service maintenance, warranty issues and repairs are part of the hire cost.
You could find this cheaper than a finance lease. If, for example, you wanted to buy a excavator for £100,000, a finance lease would be structured to pay off the whole amount plus interest over a period of, say, five years. However, under contract hire, the contract is based on length of hire and thefore any shortful in finance and residual value is down to us.
One of the big benefits of contract hire to a small business is that there is no large capital outlay for equipment that could damage the company’s balance sheet. While your business needs certain equipment, through a contract hire agreement only the rental charges will be shown on the balance sheet which should make it more attractive.
In summary, which means you can budget predictably for all your equipment costs which is fixed for the length of the contract. . The other benefits are there are no large deposits and upfront VAT payments to find. When your contract hire agreement ends there are two options available to you. These are:
Return the equipment and hire a new one or.
Get an extension on the agreement which in some agreements can be slightly cheaper.
SO WHAT ARE THE BENEFITS OF CONTRACT HIRE?
- No deposit required
- Low fixed monthly repayments with VAT payable monthly
- Extended warranty built in for peace of mind
- Service costs built in removing need for additional budget
- Lease payments are tax deductible
- Benefit from the use of the machines without all the hassles of ownership
- Residual value taken means repayments are heavily discounted, often to less than the cash price of machine package.
- Flexible terms from 36 to 84 months
- Option to extend the lease period at the end of the contract
- Return vehicle at end of contract and start a new agreement on a new vehicle
- No hassles with selling the equipment or losing money on the it’s value
- Better Cash Flow Management – Your business is only paying for the depreciation of the vehicle over the length of your lease contract. This frees up more cash for your business to spend on development and growth.
- We handle all administration of the equipment throughout your contract, on servicing and maintenance which eliminates the need for businesses to spend valuable resources doing this in-house.
Contract hire equipment are not counted as assets. Therefore your company’s balance sheet will show an immediate improvement in the “rate of return” on capital employed (via the asset value of the balance sheet being reduced).