Contract hire, another way to buy a new car

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In the business world and of the self-employed the cost of the vehicle fleet can turn into a headache for its unpredictability: what if there is a breakdown? do you change the quotas of the insurance? how tap change tires? All of that is avoided by the mode contract hire, which offer banks and specialized companies.

cars contract hire are bought in a volume sufficient for the manufacturer to be able to adjust a bit more the prices of the specialized companies in the business. The cost of the fee includes everything: purchase, scheduled maintenance, insurance, replacement of tires, etc Are signing a contract stipulating term (in years) and total mileage. There are also modalities of renting flexible, although they can be higher fees.

For example, for a contract of three years and 60,000 miles, the customer should not go over that mileage for that will not increase the total expenditure, and, depending on the company, there may be a bonus for not having come to a full stop. For that mileage it will be referred to as a tire change.

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cars contract hire can be interesting for the company because they are a payment in kind to workers, and can have deductions on the taxes. With the tax reform of last year, you can deduct 15-30% of the personal income TAX, depending on the ecological credentials of the new acquisitions.

There are three groups of vehicles to beneficiaries:

  • 15% deduction: with emissions below 120 g/km of CO2, up to 25,000 euros (without taxes)
  • 20% of deduction: as before, up to 35,000 euros (without taxes), but with technologies of alternative propulsion (hybrid or gas)
  • 30% deduction: pure electric or plug-in hybrids, up to 40,000 euro (without the taxes)

In other words, a company that dedida acquire for your team of commercial conventional hybrids and can be deducted 20% of personal income TAX. The taxes derived from the contract hire, as is the VAT, are deductible for companies. The Government took this measure to stimulate the channel of companies, responsible for the fourth part of the registrations in Spain.

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The most common is that the cars contract hire are diesel, for which the employee has a lower expense in fuel, and for that you get more benefit in CO2 emissions

With the contract hire the company externalizes the costs of the vehicles and converts it into a fixed. Gives equal to that it has faults or problems of any kind, a month-to-month you pay the same, and the maintenance is also outsourced. In the opposite case, there are costs to have these cars a day, although take individual workshops or official.

At the end of the contract, there are three options: a) give up the car, (b) continue to pay dues for a new one, or c) pay the residual value and not return it. This formula is not interesting for private individuals, because there may be deducted the fees contract hire. It is a matter of making numbers, but the individuals to which the contract hire they are interested in have a pattern of using very specific of miles, or type of car.

For some people may go to has to pay a little more, month by month, for the convenience or the caprice of changing the car frequently and lose less money. Even the public administrations have begun to place more emphasis on these formulas in order to reduce the costs of their vehicle fleets.

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Pay-per-use alternative to renting for individuals

Knowing that each time buyers are less willing to face the economic ruin that’s supposed to keep a car, manufacturers have begun to bet on alternative formulas to the purchase, as the pay-per-use, pay per drive or nicknames similar. Among the advantages are advertised under bondage, but with the same flexibility that the contract hire.

Eye, the “all-inclusive” tends to increase the base quota

This formula may benefit people that do not compensate a rental car to use, but neither will quit interesting to keep a car on property with all of your expenses for the miles that I do. It is a matter of making numbers. The maintenance is performed at dealership with original parts, in good logic.

The term of the contract, is as the contract hire, the car can return, keep or swap for another. You need to look at each offer with a magnifying glass, because it is not the same as pay-per-use, a system of funding to private dress contract hire. In any case, is not such a good idea for those who make a purchase in the long term, but for those who want to change often.