Hire Purchase
Hire purchase is a simple and very popular way to finance the purchase of your new vehicle. In simple terms you will:
- Pay your agreed deposit.
- Choose your agreed term (12 – 60 Months) and repay the balance over this period with a fixed monthly payment
- At the end of the contract subject to all payments having been made, including the final (option to purchase fee) the vehicle is then yours to keep, sell, or trade in for a new one
Personal Contract Plan
A Personal Contract Plan (PCP) is the most flexible way of financing your car. In simple terms it gives you flexibility by the way of:
- The deposit you pay.
- The length of the agreement.
- The Mileage you will travel.
- A Motor Depot "renew" is open to you at the end of the contract
Renew finance is flexible because it can be tailored to meet your requirements and circumstances, initial deposits can vary from the equivalent of one monthly payment.
A choice can be made about the length of the agreement, any month between 18 – 42 Month’s can be chosen and the contract mileage up to 25,000 miles per annum or 80,000 miles throughout the entire agreement.
The Key to Renew finance is to match the monthly payment to your motoring budget, this is achieved by setting aside a final payment, which is a proportion of the cars present value at the start of the contract, which becomes payable at the end of the contract.
Example
Lets take a car worth £10,000. Motor Depot have a computer that gives us the guaranteed future value of that vehicle in, lets say,
three years time. We deduct that future value from the selling price right now leaving you to pay on the small balance plus of course
the cost of money (i.e. the interest), and that's it.
At the end of the agreement you have three choices:
All or part of the difference if any between the final payment and your vehicle trade in value can be used towards the deposit
on your next vehicle.
The final payment (including the 'option to purchase' fee) can be paid and you can simply keep the car.
You can decide to hand back the car to your Motor Depot / Finance provider, and providing all the obligations of your agreement have
been met you will have nothing else to pay.
The main benefits at a glance:
- Fixed monthly payments.
- Flexible term and deposit.
- Guaranteed minimum future vehicle of the vehicle (the final payment) agreed at the outset.
- Inflation proof payments.
Contract Hire
Contract hire is frequently the first vehicle financing choice for businesses. It provides the use of a vehicle at a fixed monthly cost that can even include full Servicing / Maintenance costs, Tires and Road Fund Renewal. This delivers a regular motoring cost for budgeting purposes and also enables a flexible method of off balance sheet funding.
Current UK tax legislation also helps to keep contract hire costs lower and businesses may be able to reclaim up to 50% of the VAT payable on the monthly rentals if for registered business users with a proportion of private vehicle usage. Additionally the full VAT on the Service / Maintenance element (if taken) may be recoverable in full.
- Contract hire additional options
- Servicing costs
- Maintenance costs
- Tyre replacement (for normal wear only)
- A replacement vehicle following an accident or breakdown or during services
Contract hire is available on 12 to 36 months terms and the level of the monthly payment is calculated according to
- The value of the vehicle
- The initial rental
- The length of the rental period (12 to 36 months)
- The agreed annual mileage
- The exact package to suit your needs
Taxation, legislation and accounting practices are subject to change and current business allowances can be changed at any time, for specific guidance you should contact your own financial advisor in these regards
Finance Lease
Finance leasing is a long established vehicle financing method for businesses and business users alike and it can offer significant tax advantages and can benefit cash flow.
Once the lease period of usually between one to four years is agreed, the business pays an advance payment equal to between three and six monthly rentals. The choice is then made to spread the remaining balance over the remainder of the period or choose to have a larger balloon rental at the end of the term. This has the effect of keeping the monthly rentals lower, tax legislation also helps to keep finance lease costs lower as you may be able to reclaim up to 50% of the VAT on the monthly rentals, if you are a registered business user with an amount of private mileage.
The level of the monthly rental is determined according to
- The value of the vehicle
- The initial rental (3 to 36 months)
- The length of the repayment period (1 to 4 years)
- The amount of the final balloon payment at the end of the arranged period
After the arranged period the vehicle is the property of the business subject to the terms of the contract being met.
Taxation legislation and accounting practices are subject to change and current business allowances can be changed at any time, for specific guidance you should contact your own financial advisor in these regards.
Please contact us for further information.