Companies
Companies, particularly VAT registered businesses should find leasing ideal. Most companies can reclaim half the VAT on their leased vehicles, and this generates an automatic advantage compared with buying, as VAT on cars is not generally reclaimable.
Leasing conserves cash flow, and is particularly helpful for younger and expanding companies. It also helps the company because the total ownership costs are easier to quantify and predict.
Because leased or contract hired vehicles use off-balance-sheet financing, they help companies balance sheets to look healthier.

Individuals
Most individual will not be able to benefit from reclaiming any of the VAT chargeable on the lease, however this does not really penalise them because VAT on the vehicles themselves could not be reclaimed, leaving the individual no worse off. Some contract hire deals are available only to companies, others are open to all, subject to credit status.
Because of greatly increased and punitive tax levels charged on company cars, many companies have encouraged employees to provide their own vehicles, and this is also beneficial to most employees. The company car tax is based on a notional benefit in kind value somewhat arbitrarily and unfairly imposed by the Chancellor and the UK taxation system. In many cases the notional benefit is well in excess of the actual cost incurred, and is partially based on how "green" the vehicle is perceived to be, a sop to the old labour values of taxing those who work hard enough to succeed to appease the lazy indolent masses who prefer to be nannied by our welfare state. But let's not get too political...
All other considerations affect both individuals and companies about equally. We will use the terms lease and contract hire as being interchangeable for brevity, for the time being, although we will discuss the differences elsewhere on this site.

Decisions and Considerations

• Budget
  How much would you spend on buying a car, what would that cost to finance and run. How much to lease.
• What car, which model, what extras.
• How long would you prefer to use the car, are lease available for similar periods.
• New car or old. Most leases are for new cars, but some nearly new vehicles are available.
• How flexible are you prepared to be. Because leasing can be so cost effective, it pays to be slightly flexible about your choice of make, model, colour, and other details.
• Calculate and compare total ownership costs over the usage life of the vehicle. Use like for like comparisons or adjustments to get to an informed decision..
• Estimate your annual mileage, and look for lease deals with similar mileage provisions. Most leasing companies will give quotes for different mileage options, some will not. On some deals, the advertised mileage figures will be the best deal, and varying the mileage may sharply increase costs, on other deals the increase may be less severe. Most lease allow for excess mileage, often with two different bands, the first band may apply at a modest rate for the first thousand miles, followed by a punitive rate for mileage in excess.
• Shop around, and look for the best deals, there are often considerable variations in price between same models from different companies.
• Start shopping early, and be prepared to wait for the best deals.

Car Leasing & Contract Hire

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