In view of the present financial scenario, an increasing number of business houses and individuals are in search of more prospective alternatives for purchasing their vehicles, rather than opting for the traditional modes of purchase such as a bank loan or in cash. Both individuals and corporate clientele, instead of actually purchasing the car of their choice, are opting for something called ‘Contract Hire’.
In view of the above, it is good to note that one of the most lucrative financial schemes for availing a car is via ‘Car contract hire’. Both individuals’ as well corporate houses may avail of this scheme. An individual may pursue the scheme as ‘Personal contract hire’ (PCH) and a corporate as ‘Business contract hire’ (BCH). On the basis of this contract, individuals’ and corporate houses may hire a vehicle as per their choice for a specific period of time, i.e. generally between 12 months to 60 months at low monthly rentals. When the period of ‘hire contract’ comes to an end, the car or vehicle is returned to financer, with the user having no burden and accountability on his or her shoulders whatsoever.
In this regard the ‘Car Contract Hire’ scheme is much more advantageous and affordable, since you are not required to purchase the car and neither are you required to cough up the entire cost of the car in the course of the contract time frame; you are just about paying a monthly rental only. Actually you are meeting the initial cost of the car subtracted from the financer’s future estimation residual value clubbed with interest. Now if the car that you have selected has a good and strong residual value, your monthly installments would be a lot cheaper as compared to a car having a low residual value.
To explain the aforementioned sentence in simple words, you could hire a BMW or an Audi for the same monthly installments as that of a Passat or Mondeo through the ‘Car Contract Hire’ financial scheme. Apart from this you may choose to add on all the servicing and maintenance issues, that goes on to cover battery to tire replacements, exhausts and the normal wear and tear of the car in the course of using it. Thus you can be at peace and needn’t worry about nasty and exorbitant service bills. Thus the ‘Car Contract Hire’ financial scheme is really a ‘boon’ in this regard.
To conclude let’s take a short of review of the ‘Car Contract Hire’ financial scheme. The scheme facilitates perfect monthly budgeting and enhances cash flow and liquidity. For a corporate the cost of the vehicle is reflected off the balance sheet and this takes ‘gearing ratios’ into account. Another major advantage of this financial scheme is fixed monthly installments that is not affected or influenced by hikes in the rates of interest. Then all your risks pertaining to maintenance and servicing is taken care of. In case of a corporate or business house, tax benefits can be availed of against paid rentals and 50{76488d7beee9342520d1e29c32b364734fa095d7f8789716ce59b51776a6898b} of Valued added Tax (VAT) can be recovered on monthly rentals; and not to forget that the ‘Car Contract Hire’ financial scheme includes road fund license for the entire contract period.