Financing Vehicles

How you finance your vehicle can be an important business decision.

There are several factors to take into consideration such as how many miles a year you intend to do, how long you intend to keep the vehicle for and do you wish to own the vehicle or send it back at the end of the agreement?

Below is a brief guide to the various forms of finance, but if you need more detailed information please ring our sales team on 0845 6 121 262.

Finance Lease

A contract based upon a pre-agreed period to simply finance the acquisition of a vehicle. The capital cost is spread over the term and typically incorporates a final payment based upon the predicted resale value determined by the anticipated annual mileage. VAT on the original purchase price is reclaimed by the Funder, which allows the monthly costs to be reduced to reflect the VAT saving. A finance lease or flexible lease  can be terminated early and allow greater flexibility although depreciation risk remains with you. The vehicle is sold on to a third party at contract termination and provides the opportunity for you to benefit from any available equity.

Benefits:

• The leasing company is able to reclaim all the VAT on the purchase price of the vehicles, which is reflected in much lower monthly payments to the customer.

• Fixed monthly payments for the duration of the contract help planning ahead.

• Initial payment requirements are generally low.

• The rentals are tax deductible.

• A residual value can be included in the lease thereby reducing the monthly payments and helping cash-flow.

• No mileage or condition penalties, but your payment are still totally deductible against taxable profit.

Contract Hire

A fixed term agreement based upon a predetermined annual mileage, Contract Hire removes the risk of depreciation and regularizes cash flow with a fixed monthly payment including road fund licence. Additional services can be arranged to include vehicle servicing and maintenance, tyres and exhaust replacements, breakdown assistance, and relief vehicle facility. The ability of the Funder to reclaim VAT on purchase reduces the monthly payment in comparison with a purchase plan.

Benefits:

• The rentals are tax deductible

• Initial payment requirements are generally low

• Pre-determined costs 'smooth out' cash flow

• Rentals can include maintenance

• No purchasing, disposal hassles or risks

• The leasing company is able to reclaim all the VAT of the purchase price of the vehicles, which is reflected in much lower overall costs.

Personal Contract Purchase

Designed for the consumer, this product utilizes the future value of a vehicle to reduce monthly costs. This value is guaranteed based upon an agreed predetermined annual mileage and allows an option to either purchase the vehicle for this price or simply return it to the Funder with no extra cost (subject to mileage and/ or condition). Service and maintenance facilities can also be included where required.

Benefits:

• Initial payment requirements are generally low.

• Pre-determined costs 'smooth out' personal cash flow.

• Rentals can include full maintenance.

• No purchasing, disposal hassles or risks.

• You have the option to purchase the vehicle at the end of the contract.

Lease Purchase

This type of agreement is a pure funding method of spreading the vehicle purchase value over an extended term. Initial payment requirements are usually lower than hire purchase and a proportion of the depreciation can be deferred by including a final balloon payment.

Benefits:

• Fixed monthly payments for the duration of the contract help planning ahead.

• Initial payment requirements are generally low.

• You can purchase the vehicle at the end of the contract.

• A residual value can be included in the lease thereby reducing the monthly payments.

Contract Purchase

This product utilizes the future value of a vehicle to reduce monthly costs. This value is guaranteed based upon an agreed predetermined annual mileage and allows an option to either purchase the vehicle for this price or simply return it to the Funder with no extra cost (subject to mileage and/ or condition). Service and maintenance facilities can also be included where required.

Benefits:

• Initial payment requirements are generally low
• Pre-determined costs 'smooth out' cash flow
• Payments can include maintenance
• No purchasing, disposal hassles or risks

Business Hire Purchase

Hire purchase enables you to buy a vehicle over a pre-determined period (usually 1-5 years).  Once all the payments have been made, title of the vehicle transfers to you. You can have a payment at the end of the agreement to reduce the monthly repayments.  Both these options retain flexibility during the period of the agreement.  

Benefits:

• The vehicle is owned at the end of the agreement (this can affect tax paid though).
• The vehicle is written down and the interest paid is taken into account when calculating tax paid.
• Flexibility