Business Finance

CONTRACT HIRE

Contract Hire is the most common form of vehicle leasing and offers many benefits to businesses. It allows a company to take on cars or vans for a set period of time and pay a fixed monthly rental. The company taking out the Contract Hire agreement does not own the vehicle, reducing the financial risk to the business and easing the administrative process of buying, servicing and disposing of vehicles.

HOW CONTRACT HIRE WORKS

1. You pay the advanced rental ranging from 3 to 12 months upfront.

2. Fixed monthly rental for the duration of your contract.

3. At the end of your agreement, you simply return the vehicle back to us.*

*Subject to any excess mileage charges and damages which exceeds fair wear and tear.

HIRE PURCHASE

Hire Purchase is the classical way to finance your vehicle. It involves paying off the cost of the vehicle with interest on a monthly basis. Despite being a great way to personally finance your vehicle, Hire Purchase is also a popular finance choice for businesses.

HOW HIRE PURCHASE WORKS

1. You let us know how much deposit you would like to pay.

2. From this we calculate, including interest, the monthly payments for the duration of the contract.

3. At the end of the agreement, after all payments have been made (including the Option to Purchase Fee), ownership of the vehicle is transferred to you.

LEASE PURCHASE
Lease purchase is a flexible finance option similar to Hire purchase, however allows for an optional deferred sum (‘balloon’) to be paid at the end of the agreement. This deferred sum can reduce your monthly payment or reduce your contract length.

HOW LEASE PURCHASE WORKS

1. You pay an initial deposit followed by a fixed number of monthly payments over an agreed contract period.

2. Monthly payments can be reduced by making a ‘balloon’ payment at the end of the agreement.

3. The amount of the balloon payment will be agreed on at the beginning of the contract.

FINANCE LEASE

Finance Lease is a hire product which gives businesses the flexible option of retaining the vehicle (for a small annual fee) at the end of the agreement. However, the customer may also sell the vehicle to a third party once all the rental payments have been made. The customer retains 100% of the sales proceeds (paid as a rebate of rentals).

HOW DOES FINANCE LEASE WORK?

1. You pay an advance rental followed by a fixed number of monthly rentals over an agreed contract period.

2. To help bring down your monthly rentals, and improve cash flow, you can choose to take an optional balloon payment. The payment of the balloon is made at the end of the primary contract period. We will need an expected annual mileage to help us with this calculation. VAT is paid on the monthly rentals whereas with a purchase finance option the customer would be required to pay the whole VAT up front.

3. At the end of the term there are two options. Even though you do not own the car, you can sell it on our behalf. You keep 100% of the sale proceeds, which you can then use as the advance rental for your next new vehicle. You may be able to offset this advance rental against your taxable profits*. Alternatively, once all the rentals and any balloon payment are paid, you can continue your contract with us by entering a secondary period of rental. You will pay a “peppercorn rental” of just £50 a year plus VAT. So, if your vehicle is still working hard for you, maybe with bespoke decals or fittings, you have the option to keep using it or replace it – the choice is yours!

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