Short Term Contract Hire

With the light still eluding the economical tunnel, both companies and individuals are resorting to short term contract hire facilities to stay in the fast lane, enjoy a spectrum of benefits on offer and defy the economic uncertainty with aplomb.

Short Term Contract Hire services lease vehicles to private individuals and companies who wish to hire a vehicle for a shorter than average period of time. The vehicles are leased for an agreed period of time at fixed monthly payment. For instance, if a short term contract hire company enters into an agreement to service another company and requires vehicles for a shorter period than that of Contract Hire. Usually this short term contract hire period lasts between three and eighteen months. The vehicles are handed back with no further commitment after the agreed period is over.

Under short term contract hire, the leased vehicles continue to be owned by the leasing company and therefore all risks and recurring costs are borne by the lending company itself. Since you are leasing the vehicle, you have to pay an initial rental, which is usually equivalent of three monthly payments.

The monthly amount to be paid depends upon the duration of contract, estimated mileage during this period and the anticipated resale value of the vehicle at the end of the contract. As contract hire requires you to pay just a fixed monthly rent, it releases capital from your current vehicle by selling it and enables you to invest the larger amount acquired for critical business needs.

You can reclaim 100% maintenance rental and 50 to 100% of the VAT on the finance rental under short term contract hire, but no VAT can be recovered if you opt to purchase a new vehicle. Improving your company’s gearing, short term contract hire delivers off balance sheet funding and better liquidity to help you to ward off the demons of credit crunch.

If you have exceeded your contracted mileage, you’ll be required to put up an ‘Excess Mileage Charge’ while handing back the vehicle at the end of the contract period.

Benefits of Short-Term Contract Hire

• Off Balance Sheet funding improves cash flow and offers additional funding opportunities and therefore short term contract hire assists in the smooth running of your organization.
• No large lump sum cash payment is required for short term contract hire.
• Substantial VAT and other Tax savings
• Monthly payments of a short term contract hire agreement are significantly lower than that of a car loan.
• You can have access to latest car designs and newer models on a regular basis
• Selling or scrapping of vehicles are taken care of by the lending company
• By taking out the maintenance option you don’t have to worry about the maintenance bills and road taxes. You will have access to improved manufacturer discounts on purchase as well.

Opt for short term contract hire specialist and choose to stay afloat at times of economic crisis.