Hire/Lease Purchase
For non-VAT – registered companies that want eventual ownership of the vehicle. A funding agreement where the company acquires ownership when all payments, including the purchase payment have been made. Part of the capital cost of the vehicle payment may be deferred into a Balloon Payment at the end of the agreement, which equates to the anticipated market value of the vehicle at the end of the agreed leasing period.
The benefits of Lease Purchase:
- Fixed monthly cost
- Ownership at the end of the lease
- Flexible contract
- Balloon Payment
- Low initial outlay
- Business capital not tied up in a depreciating asset
- Finance not subject to VAT
- Interest reclaimable against tax
- Writing down allowance
- Road fund licence included for the full contract len
Please see attached chart which gives you an overview of product features. However please feel free to contact us to obtain further in depth information.
| Contract Hire | Contract Purchase | Hire/Lease Purchase | Finance Lease | PCH/PCP | Outright Purchase | |
|---|---|---|---|---|---|---|
| Accurate monthly budgeting | X | X | X | X | X | |
| Improved cash flow | X | X | X | X | X | |
| Low Deposit | X | X | X | X | ||
| Fixed interest rates | X | X | X | X | X | n/a |
| Capital allowances available | X | X | n/a | X | ||
| Ownership of vehicle | Optional | X | Optional | X | ||
| VAT recoverable on rentals | X (1) | X (1) | ||||
| VAT recovered by lease company to reduce rental | X | X | ||||
| No depreciation risks | X | X | X | |||
| Note 1: Only 50% of the VAT relating to the finance element is recoverable if there is private use of the vehicle. If the vehicle is only used for business purposes 100% of the service element VAT is recoverable on contract hire only. | ||||||
Running the Vehicle
| Contract Hire | Contract Purchase | Hire/Lease Purchase | Finance Lease | PCH/PCP | Outright Purchase | |
|---|---|---|---|---|---|---|
| Vehicle disposal | X | X | X | |||
| Reduced administration | X | X | Optional | Optional | X | Optional |
| Road fund licence provided | X | X | X (2) | |||
| Breakdown cover | Optional | Optional | Optional | Optional | Optional | Optional |
| Relief vehicle | Optional | Optional | Optional | |||
| Fixed charge maintenance | Optional | Optional | Optional | |||
| Payment Protection | Optional | Optional | Optional | Optional | Optional | |
| VAT recoverable on services | X | X | X (2) | X | ||
| Optional GAP insurance | X | X | X | X | X | |
| Note 2: Road fund licence is provided for the first year only. | ||||||
