Financing Your Vehicles
Business / Company Car Contract Hire
Contract Hire is a popular choice amongst companies seeking to remove assets from their balance sheet, eliminate the financial risk associated with disposing of their vehicles and benefit from the convenience of a optional full maintenance service at a fixed monthly cost. Contract Hire also allows companies to reclaim 100% of the VAT on the servicing element of the rental cost, and 50% of the VAT on the finance rental cost.
Under Contract Hire, the customer is never entitled to purchase the vehicle it must be sold to an unconnected third party at the end of the contract.
There is a wide choice of financial arrangements available to companies when sourcing a vehicle, but the continued growth in the Contract Hire market suggests that this funding method will remain the preferred choice for most companies in the future.
Business Car Leasing / Company Car Finance Lease
Business Car Leasing or Company Car Finance Lease is a product which provides the finance funding only. However, the company is never entitled to purchase the vehicle – it must be sold to an unconnected third party when you have finished with the vehicle.
As a business customer on a company car lease contract, you will bear the risk of any financial settlement (if any) from the vehicle value at the end of the contract. The optional final rental owed on the agreement will be stated on your finance lease contract agreement. Many customers manage this risk by requesting a ‘Balloon’ rental payment that is less than the predicted Residual Value, creating a ‘safety’ margin in case of changes in your circumstances over the contract period.
You also may have the option to keep the vehicle for a further period of time by paying a annual “Peppercorn Rental” usually equal to about two monthly payments (contact your broker or finance provider). Always be aware that if a final payment has been included within your contract you are still responsible for settling this amount.
If you are considering changing your vehicle for your business, your next step is to contact one of our advertising car leasing companies to let them know how you might like to proceed. Alternatively, click on any advert and hyperlink to your chosen supplier click “QUOTE ME” for a quotation or telephone for further information.
Car Contract Purchase
Car or van Contract Purchase offers many of the ‘NO RISK’ advantages of Contract Hire, coupled with an optional service and maintenance package. It also enables you to purchase the vehicle the end of the contract agreement for a guaranteed price.
However, the vehicle will registered in your company name and will therefore will appear on the company balance sheet as an asset. This means that the Writing Down allowances can be claimed. VAT is charged only on the servicing element of the monthly payment. Contract Purchase is ideal for companies who can’t fully reclaim VAT. And is more suitable for financing expensive cars over £23000 +.
At the end of your Contract Purchase agreeement term there are various options open to you and you will need to decide whether you wish to purchase the vehicle, or allow the leasing company to dispose of it on your behalf.
If you are considering changing your vehicle, your next step is to contact one of our advertisers to let them know how you might like to proceed. Alternatively, click on any advert and hyperlink to your chosen supplier click “QUOTE ME” for a quotation or telephone for further information.
Vehicle Lease Purchase
Lease Purchase is an agreement designed to offer dedicated vehicle funding where the customer wishes to purchase the vehicle. It is purely a financial package, and does not allow inclusion of an maintenance package or any other added-value services (such as are available through Contract Purchase).
The customer is fully liable for the full value of the vehicle and has no option to return the vehicle to the contract provider it at the end of the agreement. All Monthly payments are not subject to VAT.
Vehicle are registered in the name of the customer, and where this is a company, the vehicle will appear on the balance sheet, and Writing Down allowance will be available.
You will need to decide whether you wish to pay your ‘Balloon’ payment now or to defer the purchase of your vehicle further by extending the finance for a further period.
If you are considering changing your vehicle, your next step is to contact one of our advertisers to let them know how you might like to proceed. Alternatively, click on any advert and hyperlink to your chosen supplier click “QUOTE ME” for a quotation or telephone for further information.
Hire Purchase
This is the traditional form of financing a vehicle it usually runs for between 12-60 months and you own the vehicle at the end of the term. Many people shy away from Hire Purchase now days as it is seen as outdated, with many more companies preferring lease purchase or contract hire.
Actually in many cases it is the most cost effective and flexible finance option on the market. You can pay the deal up at any point and the interest is calculated daily so no big shocks or surprises, no over mileage charges, no damage charges, no worrying about contract end, not tied in for the long haul.
We often take companies out of their lease schemes and get them in to purchasing their vehicles either by HP or outright purchase as it is often the best solution for them.
Buying Outright
Purchasing the vehicles outright is by far the most cost efficient way of running a fleet, if your company is cash rich or has good finance rates agreed as part of the business, this is the way to go. Many other fleet companies will tell you different but let us assure you owning your vehicle, providing the correct choice has been made, works and works well. The flexibility, cost saving and range of choice is unsurpassed.
It’s usually lack of market knowledge and overwhelming choice that scares companies in to the so called safe option of a regular monthly payment. However as with most things in life knowledge is power and by using A1 use our knowledge for your own gain.