Finance
CONTRACT HIRE: is a type of finance package, available to business users who prefer not to own the vehicle. A standard package involves three payments by way of a deposit followed by a number of following monthly payments dependant on the term of the contract. As an example a 3/35 profile for a three year term, i.e. 3 at the start of the term and followed by 35 monthly payments to follow. At the end of the contract the vehicle is returned and usually a further contract taken out. All payments are subject to VAT and are 100% reclaimable against taxable profit.
The benefits include:
- Low initial costs
- Fixed monthly charges for cash flow management
- No risk of depreciation or disposal.
FINANCE LEASING: is an excellent funding scheme for non-VAT an VAT registered customers, as the VAT element is spread over the term of the lease, Again all payments are subject to VAT and are reclaimable against taxable profit, but you have an interest in the vehicle at the end of the term. At the end of the initial period, you may either sell to an independent third party and retain 95% of the sale proceeds or re-lease on an annual basis for whatever the original monthly premium was. This is also known as peppercorn rental.
The benefits include:
- Low initial outlay
- VAT spread over term of lease
- 95% equity in the sale of the vehicle at the end of the term
- Option of balloon payment at the end of the lease to reduce monthly costs even more
HIRE PURCHASE: is the most traditional method of funding your vehicle as it is the one that most people have heard about and thus enquire about. and model. This is for customers who wish to own the vehicle at the end of the term. The initial payment or deposit can be as low as the VAT element of the cost of the vehicle usually with the first registration fee and first years road fund duty added to it. The premium depends on make and model, initial deposit, duration of term and if a balloon payment is required at the end of the term. Larger deposits and end payment balloons are possible to help manage the monthly cash flow.
The benefits include:
- Ownership of the asset
- Fixed monthly costs