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Why is rental so popular? |
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Naturally, at Birchwood we’re all good-looking, intelligent, and very popular materials handling types - that pretty much goes without saying.
But how come forklift contract hire is proving so popular? And what’s in it for the average user? Here’s why we believe many are mental for rental...
Lease Option? Hire Purchase? Rental? Contract Hire? Make your mind up, which is it and what is it?
Call it what you like, but we generally refer to rental or contract hire as the term for supplying equipment that is paid for on a weekly rate, via a financing agreement. Rental is the old fashioned, but still widely accepted term and Contract Hire the cleaned up professional / spin doctored version.
How popular is Contract Hire?
Contract Hire is a very popular choice for VAT Registered companies with more than 70% choosing this funding method.
Tax advantages and reduced administration undoubtedly allows businesses to budget more accurately for their requirements.
Contract Hire is available to Sole Traders, Partnerships and Ltd Companies.
What about Lease Purchase?
A lease purchase contract allows the buyer to purchase the truck for a fixed monthly fee over a predetermined period.
When a sum equal to the original full price plus interest has been paid in equal installments the buyer achieves full ownership of the goods. As a result there are a number of financial benefits for the customer, including:
Accurate Monthly Budgeting
Off Balance Sheet (and therefore not a taxable asset)
Improved cashflow / Minimum capital expenditure
Fixed interest rates
Rentals allowable against taxable Income
V.A.T recoverable on monthly rental costs
No depreciation risks or equipment disposal problems
Reduced administration
On-going advice and support
Optional maintenance packages
Guaranteed availability
...and the cons?
It may seem obvious, but you are entering into a long-term finance agreement, which means that if you default on paying the instalments, the owner can repossess the equipment.
However, the main area to look at is not the equipment itself but the maintenance, as there are huge variations in what constitutes contract hire maintenance.
Are there any Health & Safety implications?
The user is responsible for ensuring that a Certificate of Thorough Examination is issued annually, however, so long as you enter into a contract with a reputable company your equipment should remain in full compliance with HSE, LOLER and PUWER regulations.
Our Verdict?
The case for contract hire has rarely been stronger.
A convenient, flexible way to get what you want at a known cost, just take sensible precautions to avoid a sting in the tail. |
