Understanding finance, contract hire & leasing
We have a team of specialist finance advisors who would be happy to discuss your exact requirements in more detail.
However, in the meantime we've put together the following as a guide to the main types of vehicle finance packages available:
Personal Contract Purchase (PCP)
For private individuals who want a hassle-free and cost-effective way to finance (and if required, maintain) a vehicle.
A PCP is the popular choice amongst private buyers, especially those coming out of company car schemes, as it allows you to enjoy significant tax advantages of private car ownership while retaining the ability to change the car every 2 or 3 years. Usually comprises of an initial deposit, then 24 or 36 fixed monthly payments followed by a final balloon payment based on the anticipated residual value of the car. Can be combined with an optional all-inclusive maintenance and breakdown package if required.
Finance Lease
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 the hirer can choose to finance the entire cost over the agreed lease period, or alternatively pay lower monthly rentals during the lease period with a final balloon payment based on the anticipated resale value of the vehicle.
Lease Purchase
For non-VAT-registered companies that want eventual ownership of the vehicle.
A funding agreement where the company acquires ownership when all the payments, including the option to purchase, 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, based on the anticipated market value of the vehicle at the end of the agreed leasing period.
Contract Hire
A popular choice for VAT-registered companies that want minimum outlay and maximum control of costs, especially when the maintenance and relief vehicle options are included.
With this VAT-beneficial financing package, one regular rental payment covers all risks, including costs of depreciation and disposal, for an agreed period of time and mileage. Road Fund Licence and roadside recovery are included, but maintenance and relief vehicle provision are options that can be added and charged to the rental payment.
Contract Purchase
The perfect Package for companies with High-value cars who would like the option to purchase the vehicles, but don't want any depreciation risks.
The contract consists of fixed monthly instalments with the asset being shown on the company balance sheet, and can either retain ownership at the end of the contract or hand the vehicle back. Can be combined with an optional all-inclusive maintenance and breakdown package if required.
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