Contract Hire – Business Users
There are many advantages both operational and financial with Contract Hire.
Principal benefits include:
- Low initial payment.
- All scheduled servicing, maintenance, tyres can be included, effectively ‘ring-fencing’ running costs.
- Servicing and Breakdown support nationwide.
- Fixed rentals allow for accurate budgeting.
- Flexible terms – variable contract duration and mileage.
Contract hire removes depreciating assets from your company’s balance sheet, eliminating the depreciation risk and the need to arrange disposal of vehicles.
- Minimal administration required
- If VAT registered, you can claim back 50% of the VAT on the finance element of the rental and 100% on maintenance element.
In some situations Contract Hire may not be appropriate.
Typically commercial or specialist vehicles, can have a hard or extended fleet life, or do very high mileage.
The flexibility of a Finance Lease may be more appropriate giving you better control over the timing of use on your fleet, and still benefiting from substantial fleet discounts calculated into monthly payments.
Finance Lease – Business Users
What is finance lease?
Finance lease is a popular agreement for companies needing cars, vans or specific commercial vehicles where contract hire is not suitable. It offers flexibility and tax advantages to eligible companies who require one or more vehicles.
As part of a finance lease agreement you can choose to pay a rental that covers the entire cost of the vehicle, including interest charges, over an agreed period.
Alternatively, you can opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle (otherwise known as the ‘balloon payment’).
Throughout the agreement, the vehicle remains the property of the leasing company. However at the end of the lease when the vehicle is sold the bulk of sale proceeds are returned to you the lessee as a ‘rebate of rentals’.
This type of agreement is only available to business customers – including limited companies, self-employed people and sole traders.
It is a particularly popular option for businesses. There are significant tax advantages and vehicle ‘rentals’ often reflect substantial fleet discounts and registration bonuses, paid by the manufacturer to the funder.
The key benefits of finance leasing:
- Fixed payments for the whole agreement
- Low up-front costs.
- Repayments often calculated incorporating substantial manufacturer fleet discounts
- Claim up to 50% of the VAT on cars and 100% on commercial vehicles (subject to being VAT registered)
- Flexible repayment structure can be tailored.
- No penalty charges for additional mileage or damage at the end of the agreement
Although you will not technically “own” the vehicle, you will receive up to 100% of the sale proceeds if the vehicle is sold to a third party at the end of the agreement.
Personal Contract Hire
(PCH) – Individual Users
PCH is very straightforward, and as the name suggests a long term hire agreement. You choose the Make and Model, confirm your annual mileage and a specific quote will be provided.
Road tax is included for the duration of the agreement.
Manufacturers are frequently changing discounts, bringing out new models, and creating special campaigns. We keep up to speed with many contemporary promotions, and would be happy to discuss with you current ‘Special Offers’.
We will discuss your likely usage pattern, and whether you require a maintenance package, to ensure we understand your needs and that all details are clearly understood.
WHAT ARE THE BENEFITS OF PCH?
- Simplicity. No need to trawl through numerous motor dealers propositions
- Transparency. A fixed monthly cost covers all depreciation, Road Fund Licence, and maintenance – if selected – makes easier budgeting.
- Flexible payment structure – from 24 to 60 months.
- Wide range of vehicles available.
- New vehicle available at affordable monthly payment.
- The vehicle is not subject to Benefit in Kind tax.
- Complete freedom of choice – Make, Model, Specification.