What advantages does car contract hire have more than buying a car using a loan? What incentives are there ? Well that depends on your situation.
For a business
For a business, if you buy a car with a loan, or with cash, then you are purchasing an asset for your business. This means that you could merely write off part of the purchase price each year, even if you have paid out the full amount. Especially if you buy the car with money, this means there is a huge difference between what you have paid and what you can reclaim tax on.
However, with contract leasing you could put down each month’s payments on your balance sheet, so there is no tax loss.
For everyone buying with a loan
If you buy a new car with a car loan, then the loan is for the full amount of the car. However, because of the way the lease payments are calculated you are just paying for the expected depreciation of the vehicle for the duration of your contract. This means that you are effectively borrowing less, thus reducing the amount of the monthly payment.
For those with vehicle maintenance on their mind
Buying a vehicle could be a risk. Are you going to buy one that is a perfect runner and goes its life without anything spent on maintenance? Or will the engine fall out the moment it goes out of warranty? Well with contract leasing you might arrange it so that your payments also cover the price of all maintenance of the car. Whatever breaks down on the car, your leasing company is going to get it sorted. And that could even include roadside assistance from a breakdown service! So you know from the outset exactly what you monthly payments are going to be on the vehicle.
For those at the end of the leasing period
At the end of the leasing period you only straightforwardly hand back the car. However, if you have fallen in love with the car and are desperate to keep it, most companies will allow you to either extend the lease further or even to pay a one off payment for you to purchase the car in its entirety.
Car leasing might have lots of benefits if you are looking for a new car. Take a look around at what it is going to price you in terms of a loan, maintenance and everything else and then get a quote for the same car on contract leasing and see what saving you can be making on the car. In these times of financial pressure, it can mean that you can get a load more of a car than you thought!