Finance

When confronted with the various vehicle finance options available, consumers can find this a very complicated subject to understand. The following information has been provided for your assistance. Our in house specialists are available to talk to you about all the following types of finance.

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Contract Hire

A popular choice for VAT registered businesses requiring minimum outlay and providing optimum user friendliness. The vehicle is hired for an agreed period of time and a fixed rental is paid based on the anticipated mileage (the higher the mileage, the higher the rental). Contracts can be hire only or include full maintenance to cover routine servicing and tyre replacement etc. At the end of the contract the vehicle is simply returned to the finance company. Up to 100% of rentals can be offset against taxable profits and, depending on the vehicle type and nature of its use, up to 100% of the VAT on the rentals can be reclaimed.

Highlights:

  • 18- 60 month contracts
  • Low initial rental (usually equivalent to three monthly rentals)
  • Mileage restrictions apply
  • Any vehicle - new or used (up to 12 months old)
  • Vehicle does not show on Balance Sheet
  • Road tax included for full contract
  • Fixed costs

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Finance Lease

Similar to contract hire and ideal for VAT registered businesses that want to handle the administration of their vehicles. The lessee will assume responsibility for selling the vehicle at the end of the contract (instead of it being collected by the leasing company) usually to settle a pre-agreed residual payment. The lessee can potentially profit on this sale, if the sale amount exceeds the residual payment. Shown on balance sheet.

Highlights:

  • VAT on rentals
  • 18- 60 month contracts
  • Any vehicle - new or used ( up to 12 months old)
  • No mileage restrictions (although the lessee will ultimately pay for the full depreciation of the vehicle while in his possession)
  • Low initial rental (usually equivalent to three monthly rentals)

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Contract Purchase

Ideal for customers who would like the option to purchase the vehicle without taking all the depreciation risk. Similar to contract hire, the customer pays a fixed monthly payment for an agreed period of time based on an anticipated mileage. Maintenance can be included as an option. At the end of the contract the customer can pay a predetermined final payment to purchase the vehicle or simply return it to the finance company. Writing down tax allowances apply.

Highlights:

  • Low deposit (usually equivalent to three monthly payments)
  • VAT payable only on any applicable service element of the contract
  • Mileage restrictions apply
  • 18- 60 month contracts
  • Any vehicle - new or used (up to 12 months old)
  • Road tax and breakdown cover included for full contract
  • Fixed costs
  • Optional eventual ownership
  • No decision on the option to purchase need be taken until the end of the contract

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Lease Purchase / Hire purchase

Used by companies who require definite eventual ownership of the vehicle. The customer acquires the vehicle when all the payments, including an option to purchase payment, have been made. Part of the capital cost of the vehicle payment may be deferred into a 'balloon' or residual payment at the end of the agreement (Lease Purchase), which equates to the anticipated value of the vehicle at the end of the agreed loan period.

Highlights:

  • Low deposit (usually equivalent to three monthly payments or 5-10% of the capital cost of the vehicle)
  • No VAT involved
  • Writing down tax allowances apply
  • 18-60 month contracts
  • Any vehicle - new or used
  • Eventual ownership
  • No mileage restrictions (although the purchaser will ultimately pay for the full depreciation of the vehicle while in his possession)

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Personal Contracts / PCP

For private individuals who want a hassle-free and cost effective way to finance and maintain a vehicle. The individual can choose a full maintenance or non-maintenance option. A residual payment is incorporated into the contract and is payable at the end of the primary contract period, should the individual wish to acquire ownership of the vehicle. Alternatively the vehicle can be returned to the finance company at this point.

Highlights:

  • Low deposit (usually equivalent to three monthly payments)
  • Mileage restrictions apply
  • 18- 60 month contracts
  • Any vehicle - new or used
  • Breakdown cover included for full contract
  • Optional eventual ownership
  • Allows a private individual to benefit from the fleet buying power of the leasing company
  • No decision on the option to purchase need be taken until the end of the contract

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