Contract Hire

Contract Hire is the facility the customer has use of the vehicle for a set period. The contract can be taken with or without maintenance. To determine the rental we need to know what your annual mileage is. At the end of the term the vehicle is simply returned with no further costs. (subject to excess mileage and any damage)

How Does it Work?
The funding of company vehicles, regardless of fleet size can be a significant drain on financial and human resources, especially at a time when resale values are increasingly volatile.

Contract Hire can remove both the financial and administrative burden from your business. It can deliver a tax efficient form of funding which eliminates risk and helps cash flow.

Your company hires a vehicle from the Contract Hire Company for a pre-determined period at a fixed monthly rate.

Ownership of the vehicle remains with the funder. At the end of the Hire period the vehicle is simply returned. (subject to excess mileage and any damage)

The single fixed monthly rental takes into account the cost of the vehicle, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.

You can choose to include maintenance , with full breakdown cover, This will cover all of the servicing costs and replacement tyres, exhausts etc throughout the duration of the contract . Auto assist and replacement vehicle options can also be taken to ensure you are never left without a vehicle.

The Benefits

• Low initial payment, typically three monthly rentals.
• Road Fund Licence included for the term of the contract.
• Currently off Balance sheet funding as all risk remains with the Contract Hire Company.
• Lower monthly rentals as the finance company reclaims VAT on the vehicle purchase - benefiting your cash flow
• You can reclaim 50%* of the VAT on the monthly rentals
• Your initial capital outlay is reduced allowing your funds to be retained in the business.
• * 100% of the Vat on rentals can be reclaimed on cars used exclusively for business and on commercial vehicles. If any private use occurs (e.g. taking the vehicle home at night), 50% of the VAT is reclaimable. It should also be noted that this could lower depending upon the individual VAT recovery position of the business.
• ** The proportion of rentals that can be claimed is reduced for high cost cars.
• Rental allowances typically provide accelerated tax benefits.
• The Contract Hire Company reclaim the VAT on the purchase of the vehicle and pass that saving on to you in the form of lower monthly rentals.
• Removes disposal risks and protects your future profits.
• A maintenance inclusive contract will remove the inherent risks associated with running a vehicle.
• Your monthly outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
• Lines of credit can be better utilised for investment in your business
• Peace of mind.

[ back to top ]

Contract Purchase

Contract Purchase is the funding facility which gives you the option to own the vehicle at the end of the contract. Typically suited for higher value vehicles or companies who cannot re-claim VAT. As with Contract Hire you have the option of a maintenance contract. The payments do not attract VAT.

How Does it Work?
If your company is restricted to the amount of VAT it is able to reclaim, or you have several expensive (typically in excess of £25k) cars in your fleet, it may make financial sense to retain ownership of your vehicles.

Contract Purchase offers all the operational, managerial and administrative benefits of Contract Hire, together with the tax efficient benefits of ownership, such as the ability to claim capital allowances.

• Your company enters into a finance agreement for the vehicle for a pre-determined period at a fixed monthly rate.
• You have the option to buy the vehicle when the contract is up by making a final "balloon payment", agreed at the start of the term. Alternatively you can return the vehicle to the finance company with nothing more to pay. (subject to any excess mileage or damage to the vehicle)
• The single, fixed monthly payment takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.
• You can choose to include maintenance cover with full breakdown and recovery assistance, keeping the driver on the road without involving the company in complex or costly administration.
  

The Benefits

• Low initial payment, typically equal to 3 monthly finance payments.
• You retain the tax benefits of ownership throughout the contract, with the option to take full legal ownership at the end of the term.
• Removes disposal risk and protects you future profits.
• A maintenance inclusive contract will remove the inherent risks associated with running a vehicle.
• Your monthly outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
• Credit lines can be better utilised for investment in your core business.
• Peace of mind.

[ back to top ]

Finance Lease

Finance Lease is ideal for VAT registered companies who want to handle the administration of their vehicles, and have the asset shown on their balance sheet. A VAT beneficial finance option where you can choose to fund the entire cost of the vehicle over the agreed term (fully amortised), plus an interest charge, or pay lower monthly rentals during the lease period with a final balloon rental based on the age and mileage of the vehicle.

How Does It Work?
Fixed Period Finance Leasing
This is another cost effective option, traditionally used by VAT registered businesses. With a finance lease - unlike contract hire, the lease shares in the profit or loss on the sale of the vehicle at the end of the agreement. There are two types of finance lease - fixed period and full layout. Finance leasing brings with it all the tax advantages mentioned for contract hire customers.

A checklist of the main benefits:

• Lower monthly rentals as the finance company reclaims VAT on the vehicle purchase - benefiting your cashflow
• You can reclaim 50%* of the VAT on the monthly rentals
• Your initial capital outlay is reduced allowing your funds to be retained in the business.
• The rentals are allowable against tax** reducing your tax liability.
• Monthly rentals are fixed, so budgeting is easier.
• * 100% of the Vat on rentals can be reclaimed on cars used exclusively for business and on commercial vehicles. If any private use occurs (e.g. taking the vehicle home at night), 50% of the VAT is reclaimable. It should also be noted that this could lower depending upon the individual VAT recovery position of the business.
• ** The proportion of rentals that can be claimed is reduced for high cost cars
  

Fixed Period Finance Leasing
A fixed period lease enables monthly rentals to be reduced over a fixed period by agreeing an anticipated future value on the vehicle. This anticipated future value will be paid at the end of the agreement, normally out of the proceeds of selling the vehicle.

How it works
First choose the vehicle. Then select an agreement period. Depending on the agreed length, we ask you to pay a number of monthly rentals in advance. You'll undertake to pay a fixed number of low monthly rentals and a large final rental, which represents the anticipated future value of the vehicle at the end of your agreement. And then, provided you've fulfilled all the terms of the agreement, you arrange to sell the vehicle on behalf of the leasing company to a third party.
If the vehicle is sold for more than the final rental due, the difference, after deduction of VAT, will be rebated to you.

Full Payout Finance Leasing.
With a full payout finance lease you will be asked to pay a number of monthly rentals in advance followed by an agreed fixed number of monthly rentals.
If you sell the vehicle to a third party, then upto 95% of the VAT exclusive sales proceeds are rebated to you. Alternatively, if the vehicle is not sold to a third party, then you may continue to use it, and enter into a secondary rental period. the secondary rental period is calculated as 1% of the original vehicle cash price plus VAT per annum.

How it works
First choose the vehicle. Then select an agreement period. Depending on the agreed length, we ask you to pay a number of monthly rentals in advance. You'll undertake to pay a fixed number of low monthly rentals. Then, provided you've fulfilled all the terms of the agreement, you arrange to sell the vehicle on behalf of the leasing company to a third party or alternatively you may begin a secondary rental period.

[ back to top ]

Hire Purchase

This funding method is probably the most well known and straight forward way of financing your next vehicle. No VAT is charged on the monthly payments so it is an attractive option for both Non vat registered Businesses and personal users.
The interest rate is fixed at the beginning of the agreement and payments can be structured by deposit and length of agreement, with the maximum term of 60 months.

Unlike Lease purchase at the end of the agreement you own the vehicle there is no balloon payment.

[ back to top ]

Lease Purchase

This is a form of Hire Purchase. VAT is not charged on the monthly payments, so it's particularly suited to non VAT registered businesses.

Customers also enjoy reduced monthly payments with this option, as the anticipated vehicle value at the end of the agreement is deferred to one final payment. The interest rate is fixed at the beginning and does not vary throughout the term of the agreement irrespective of how interest rates change over the period.

• You can fund your vehicle as an asset on your balance sheet.
• You can claim writing down allowances.
• The finance element of your agreement is not subject to VAT.
  

How Does it Work?
First choose your vehicle. Then select an agreement period. Depending upon the agreed length, we'll ask you to pay a number of monthly payments in advance and a large final payment, which represents the anticipated future value of your vehicle at the end of your agreement. Provided you've fulfilled all the terms of your agreement, you can pay the purchase fee to take ownership of the vehicle.

[ back to top ]

Personal Contract Purchase

Personal Contract Purchase (PCP) offers the driver all of the benefits they would associate with a company car, without the personal tax burden. An integrated PCP package can ease the transition from a company car to one of their own.

The Benefits.

• Low initial payment, typically equal to 3 monthly finance payments.
• The driver can enjoy all the benefits of having a company car, including maintenance, servicing and breakdown cover, all included in one monthly payment.
• You will benefit from our considerable purchasing power and unlike many manufacturers car plans, our PCP product to any particular make or model.
• You have the option to buy the when the contract is up by making the final "balloon payment", agreed at the start of the term. Alternatively you can return the vehicle to the finance company with nothing more to pay. (subject to any excess mileage or damage to the vehicle)
• The single, fixed monthly payment takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.

[ back to top ]