Car Leasing Experts

Business Finance Options

Contract Hire

The most popular choice for VAT registered companies wanting minimum outlay and maximum control of costs, especially when the maintenance and relief vehicle options are included. One regular rental payments covers all risks including costs of depreciation and disposal. Contracts are for an agreed period of time and set mileage.

Road fund license is included. Roadside rescue, maintenance and relief vehicle provision are options that can be added and and charged to the rental payment.

Advantages

Ability to change for a brand new vehicle on a regular basis
Low initial outlay and ongoing monthly costs
No depreciation risk
No responsibility for vehicle disposal
Supplier arranges delivery and collection
Avoids tying up capital in the buying of vehicles

Disadvantages

No equity in the vehicle at the end of the contract
VAT only 50% normally reclaimable
Vehicles do not show in the balance sheet
Excess mileage penalties
Early termination penalties

Contract Purchase

For companies requiring eventual ownership of their vehicles, without depreciation risks. The customer acquires the vehicle by paying fixed monthly instalments, shows the asset on the company balance sheet and can either retail ownership at the end of the contract by paying a final predetermined balloon instalment, or hand the vehicle back if not required. Maintenance can be added to the contract thus providing the fixed cost benefits as with Contract Hire.

Finance Lease

Ideal for VAT registered companies wanting to handle the administration of vehicles and show the asset on their balance sheet. A VAT beneficial finance option where the hirer can choose to pay the entire cost over the agreed lease period, plus an interest charge, or pay lower monthly rentals during the lease period with a final payment based on the anticipated resale value of the vehicle.

Lease Purchase

Attractive for non-VAT registered companies this funding agreement allows the company to acquire ownership of the vehicle when all the payments (including the option to purchase) have been made. Part of the capital cost of the vehicle payment may be deferred into a balloon payment, which equates to the anticipated market value of the vehicle at the end of the agreed contract period.

Sale and Leaseback

For companies looking to generate capital from the sale of their vehicle and, at the same time retail their use. This VAT-beneficial scheme involves the finance company purchasing the vehicles for an agreed price, and leasing them back, using either Contract Hire or Finance Lease facilities. This can provide a welcome injection of cash for a business.

Important Note – Car Leasing Experts recommend that advice is sought from a qualified Accountant. Car Leasing Experts do not guarantee the accuracy of the guidance notes provided above and do not accept responsibility for any errors or emissions.

PERSONAL FINANCE OPTIONS

Personal Contract Hire

This is becoming a very popular method of finance because it allows you to drove a brand new car on a regular basis..

Delivers all the benefits of a company car to private purchasers, through a fixed monthly rental for a fix contract term. At the end of the contract term the vehicle is returned to the finance company taking away the hassle of selling privately and the worry over unexpected levels of depreciation.

Advantages

Ability to change for a brand new vehicle on a regular basis
Supplier arranges delivery and collection of vehicle
Low initial outlay + monthly cost
No risk of depreciation
No vehicle to dispose of
Fixed cost motoring depending on which extras you go for (excluding insurance, fuel and any excess mileage costs)

Disadvantages

No equity in the vehicle
VAT paid is not reclaimable
Excess mileage penalties
Penalty charge should the vehicle be returned early

Hire Purchase

After paying an initial deposit the balance is repaid by fixed, equal monthly payments. On completion ownership transfers to the buyer. The payments are VAT-free.

Advantages

Ownership of the vehicle
No VAT on payments
There is normally equity in the vehicle
No mileage penalties

Disadvantages

Higher monthly cost
VAT on new cars is not reclaimable
Depreciation risk is borne by the purchaser

Personal Contract Purchase

For private purchasers wanting a hassle-free and cost effective way to finance (and maintain a vehicle.. An all inclusive maintenance and breakdown package is also offered, as an optional extra.

This is a funding agreement where ownership passes to the purchaser when all payments and fees have been made. Agrements are structured using an end of agreement optional payment where the ownership of the vehicle is transferred if this payment is made.

The purchaser actually has three options at the end of the term (usually between 24 and 42 months):

The vehicle can be returned to the finance company
The residual payment can be paid to own the vehicle outright
The vehicle may be part exchanged against another vehicle

Advantages

Low initial outlay and monthly costs (fixed cost motoring)
Option to own the vehicle at the end of the term, part exchange it, or return it to the finance company
Removes the risk of unexpected depreciation
No VAT is payable on the finance

Disadvantages

VAT on new vehicles not reclaimable
Reduced equity (or none) in the vehicle
Excess mileage penalties
Early termination penalties