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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 length

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.

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Car leasing systems by CALAS