Guide to long-term car rental

This guide explains what long term car rental is, how it differs from standard car rental and the set of circumstances which mean you should consider this as an option.

What is long-term car rental?

Long-term car rental is a way of accessing a vehicle without having to commit to a long-term contract or high cash outlay. You can hire a car on a monthly basis, committing to up to six months at a time, with the flexibility to extend if you need to. Or you can just return the vehicle at the end of the final month of the agreed period with no penalties.

How do costs compare to other acquisition methods?

Based on a cost per day model, long-term car rental is much cheaper than daily rental. This is because you are committing to a minimum of one month, whereas with daily rental there is no minimum rental period to commit to and you can return the vehicle at any point. So, the effective daily rate is cheaper for long-term rental.

However, it’s more expensive per day than leasing. This is because with a leasing contract you are committing to between 12 and 48 months.

There’s a simple rule when it comes to acquiring vehicles on a rental or lease basis. The longer you commit, the less the effective daily rate of the car. But the lower the effective daily rate the less flexibility there is for you to return it.

Long term rental vs leasing cost and flexibility

Why choose long-term car rental?

1. New employees

Long-term car rental is a very good option for businesses that run a fleet of cars for staff. When a new employee starts with a company and is entitled to a company car, it can be quite a risk to commit to a lease contract from day one. What if the new employee doesn’t make the grade? If the company provides a car for six months on a long-term rental basis, it gives time for the new employee to complete their probation period and for both parties to decide if the employment will continue. We call cars taken for this reason probation cars.

2. Contract work

Many companies generate their revenue through contractual work and sometimes this work warrants additional cars. Again, long-term rental allows businesses to acquire cars that are fit for purpose and for a length of time that most closely matches the length of a contract. And if the contract extends, it is easy to extend the length of the rental.

3. Try now, commit later

When you want to change your vehicle for something completely different, how confident can you be that you can live with the choice you make? Long-term rental allows you to try a new car for a month or more and decide whether it satisfies all of your requirements. Whether those requirements are more space for the family, better economy or more helpful technology long-term rental is a great way to transition to a longer-term lease contract.

The benefits of long-term car rental

  • No servicing or maintenance costs. When you take a car on a long-term rental basis it’s the rental company that covers all the costs of servicing, maintenance and repairs. They will also provide breakdown and replacement in case something goes wrong.
  • Use your own insurance. In some instances, insurance can be provided but normally it makes more sense to insure the vehicle yourself because it will keep your monthly costs much lower even if you have to pay a small administration fee to transfer your policy to the rental car.
  • Tax relief. If you are using the car for business purposes, 100% of the rental cost for vehicles can be reclaimed against company profits if the CO2 emissions are 110g/km or less. Anything above 110g then 85% can be claimed.
  • Vehicle choice and availability. With long-term car rental you will have access to a range of vehicles and this gives you the option to change your vehicle if your circumstances change.

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