Car contract hire is known as car leasing finance; it is very popular with business because it allows the company to focus on their operations without any financial risk due to vehicles. It represents the accord between two parties to lease a vehicle. Hire amount is based on the original cost of the vehicle. Contract hire agreement includes maintenance packages.
How does contract hire work?
Contract Company hires a vehicle from Rental Company for an agreed duration and makes regular journal hire payments. The leasing company is responsible for related risks. There are several advantages and disadvantages to contract hire agreements are:-
1. Cash flow improved: – To improve the cash flow, conduct credit checks on customers. The company has to use electronic payments. Open a high – interest savings account. Increase prices.
2. Fixed interest rates: – It avoids the risk that a mortgage or loan payments it can significantly increase over time. It can be higher than variable rates.
3. Maintenance package: – It covers routine servicing and maintenance by manufacturer.
4. Fixed contract:- it is a contractual relationship between an employee and an employer for a specified period
1. More expensive: – it can work out to be costly than if you buy the assets.
2. Capital allowance: – you can claim money payment on the rental assets if the period is less than 5 to 7 years.
3. Put down a deposit: – you can take payment in advance. So you can’t suffer a problem.
Lastly, the above mentioned are some advantages and disadvantages of contract hire that you need to follow while hiring the car for personal use. There is no better way of promoting a business than through you speak word of mouth. Loyal customers come back at the business time.