Long-Term Business Vehicle Rental

 
At most companies, vehicles are not considered as the main business investment. Namely, they represent an asset by which the company conducts business and achieves its goals. However, many companies possess vehicles that are financed by assets from business operation or by bank credits. Self-financing of vehicles (i.e. non-essential business assets that are being depreciated) increases the financial risk of the company, which decreases its financial strength and capabilities. In order to purchase a vehicle, a company has to release money assets which could be used for its business activities or other, more profitable investments.

If you require a vehicle for a longer period of time and want to save time and money, instead of purchase, Avant car offers you the solution of long-term business rental of a vehicle, which considerably reduces expenses and removes many economic risks while simultaneously relieving the company of organisational and maintenance procedures.

Avant car provides for everything:

• from the purchase of a new vehicle,
• its maintenance,
• resolution of any difficulties related to the vehicle,
• to the sale of a used vehicle upon the expiry of rental period.

What is a long-term business rental?

A long-term business rental involves rental of one or several vehicles for a period of at least one year, whereby all the terms of rental and payment have been agreed upon beforehand. It is an integrated form of service, which involves financing, i.e. operating leasing, insurance, regular servicing, maintenance of winter/summer tires, substitute vehicle, 24/7 assistance, etc. Upon the lessee’s request, the lessor purchases the vehicle and hands it over to the lessee for the latter’s use. During the period of lease contract as well as after its expiry, the lessor remains the legal owner of the vehicle.

Key features of long-term business rental

• Customer has the possibility to select the vehicle model and equipment that suits him/her most. Vehicle is specially purchased for the customer and handed over to him/her to use.
• Amount of monthly rental is constant and predetermined.
• Monthly rental includes all expenses related to the maintenance of the rented vehicle. Customer is only burdened by the cost of rental and consumed fuel.
• Rental period may be arbitrary, typically from one year up to five years.
• Upon the expiry of rental, the customer has two options: he/she may prolong the rental period or return the vehicle and conclude a lease contract for a new vehicle.

Long-term business rental with additional services

The long-term business rental of vehicles at the Avant car company is designed as a total rental solution. The customer is completely relieved of organisational worries and communication with various suppliers: from purchase, registration, insurance and vehicle servicing to the technical examinations and replacement of tires. The programme also includes 24/7 assistance and the possibility of using a substitute vehicle for cases when the rented vehicle is not in driving condition.

What do you gain?

• A faster and easier path to a new vehicle. Business rental provides for a more frequent replacement of vehicles, so your vehicles are always in excellent condition.
• Although in the case of business rental you do are not the owner of the vehicle, you can use it as though it were yours.
• Simplification of everyday management. All your operating and administrative procedures are provided for, from the purchase of the new vehicle to the sale of the used vehicle upon the expiry of rental period.
• Precisely planned expenditures. You know in advance precisely how much the use of the vehicle is going to cost you. Monthly instalments remain unchanged throughout the entire period of rental.
• Saving of liquid assets. For business rental, you require only a small portion of your own assets. Free assets may be used for business activities and investments, which provide you with higher yield.
• Optimisation of expenses. Business rental with additional services (purchase, maintenance, insurance of vehicle, etc.) provides you with optimum consumption of assets for vehicles.
• Stable cash flow. Costs of rental are shown as current costs of vehicle use. In this manner, they have no effect on the structure of the balance sheet.
  

Accounting view for a long-term business rental

• On the lessee’s balance sheet, the subject of rental is not stated among the fixed assets, since it is booked as a fixed asset at the lessor. Therefore, the cost of depreciation burdens the lessor.
• In the profit and loss account, the lessee states the rent (which includes all the expenses related to rental) under the item of expenses for services of the current accounting period.
• The value-added tax is accounted individually in the amount of monthly rent.

Want more information?

• Compare different methods of financing business-use vehicles
• Take a look at the glossary of professional terms

Please contact us and together, we will design a long-term vehicle rental programme that will be most suitable to your mobility needs in terms of expenses and functionality.