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On this page you will find details
regarding Finance or Leasing Cars and Commercial Vehicles
(Vans) by either Contract Hire (CH) – Personal Contract Hire (PCH) –Personal Contract Purchase (PCP) – Contract Purchase (CP) Available
to any Business User. With
Contract Hire you pay an amount each month for the use of the
chosen vehicle. The cost per month is directly related to how much the
vehicle will depreciate over the period. Each funding company’s
rental will be based on the cost of the vehicle (the funders will
receive excellent fleet discounts) and how much that company feels the
vehicle will be worth at the end of the contract, taking into account
the period and the mileage to be covered. Each company’s view of
a vehicles future value can vary dramatically and will result in,
sometimes vast, differences in the monthly rentals you pay. Some
vehicles, that hold their value well, could cost less per month than
vehicles with a lower initial cash price. At
the end of the contract, just hand the vehicle back, subject to mileage
and condition. Each contract is calculated using the number of miles
you expect to drive each year. If this is exceeded then you pay an
additional mileage charge (pence per mile). Contracts can usually be
amended if necessary to accommodate changing circumstances. Maintenance
can be included to cover all servicing costs, tyres, batteries, wiper
blades etc. VAT
is payable on the monthly rentals. For VAT registered businesses 50% of
the Vat is reclaimable on the vehicle element of any car contract.
(100% for commercial vehicles or if the car is used 100% for business
use) 100% of the Vat is always reclaimable on the maintenance element.
This is a major benefit as, if you purchase a car outright, you can
only claim the VAT paid if there is absolutely no personal use. Sometimes
referred to as an Operating Lease. Benefits The age old ‘benefits’ of contract hire would read as follows: 1)
Spreads the cost, so improves cash flow 2)
Preserves existing credit lines 3)
Off balance sheet funding 4)
Improves gearing ratio This
might excite the financial directors amongst us – but for the
rest of us the real benefits of Contract Hire are: 1)
Risk
– lets someone else take the risk on how much the vehicle will be
worth at the end of the agreement. Do you really want to be exposed to
the vagaries of the used vehicle market? 2)
VAT
– you can claim back 50% of the VAT on the finance element (as
the majority of vehicles have some form of personal use) of car
Contract Hire, (100% of the VAT for any maintenance costs) –
compare this to not being able to claim anything if you purchase it. So
on a 3 year deal (3 rentals followed by 35) at £400 + VAT per
month you could save £ 1330 straight away. For commercial
vehicles up to 100% of the VAT is reclaimable subject to Inland Revenue
restricting this figure for personal use. N.B. Please see Vehicles and
VAT for more information. 3)
Bulk
Buying
– we buy either directly or through the funding companies and are
able to demand ‘fleet’ terms that can amount to thousands
of pounds worth of savings as against you approaching your local dealer
– this saving is passed back to you in the form of reduced
rentals. 4)
Disposal
– buying or at least choosing a car can be a great pleasure,
disposing of your old car, a great pain. Why is it that when you bought
it the salesman says ‘it’s a lovely car, we can’t get
enough of them’ only to find that in 3 years time ‘its not
the right engine’ – ‘we’ve already got 3 in
stock’ or ‘no-one wants the old model any more’
– of course everything sells at a price and we are straight back
to 1) – Risk! 5)
Using
ourselves as brokers to arrange the contract
– this means that we will obtain quotes, on your behalf, from
many of the numerous companies in the market place. We ensure we are
using the best supply prices and then compare the monthly rentals for
your chosen model, specification, period and mileage. The lowest rental
will usually mean that this company has the highest perception of how
much your chosen vehicle will be worth at the end of the contract
– this is where we place your business – with the company
that thinks it is going to be worth more than anyone else does! –
look back to 1) Risk – are you sure you want to take this risk
yourself? Do you feel you will be able to sell it for more than what
this, the most optimistic company expects? Contract
Hire but available to the private individual, the only difference is
that as you are not VAT registered you can’t claim back the VAT. Can
be ideal for people opting out of a company car scheme or wishing to
pay for the use of the vehicle without the risk and hassle involved in
vehicle disposal at the end. With
Personal Contract Hire you pay an amount each month for the use of
the chosen vehicle. The cost per month is directly related to how much
the vehicle will depreciate over the period. Each funding
company’s rental will be based on the cost of the vehicle (the
funders will receive excellent fleet discounts) and how much that
company feels the vehicle will be worth at the end of the contract,
taking into account the period and the mileage to be covered. Each
company’s view of a vehicles future value can vary dramatically
and will result in, sometimes vast, differences in the monthly rentals
you pay. Some vehicles, that hold their value well, could cost less per
month than vehicles with a lower initial cash price. At
the end of the contract, just hand the vehicle back, subject to mileage
and condition. Each contract is calculated using the number of miles
you expect to drive each year. If this is exceeded then you pay an
additional mileage charge (pence per mile). Contracts can usually be
amended if necessary to accommodate changing circumstances. Maintenance
can be included to cover all servicing costs, tyres, batteries, wiper
blades etc. Benefits 1)
Risk
–
lets someone else take the risk on how much the vehicle will be worth
at the end of the agreement. Do you really want to be exposed to the
vagaries of the used vehicle market? 2)
Bulk
Buying
– we buy either directly or through the funding companies and are
able to demand ‘fleet’ terms that can amount to thousands
of pounds worth of savings as against you approaching your local dealer
– this saving is passed back to you in the form of reduced
rentals. 3)
Disposal
– buying or at least choosing a car
can be a great pleasure, disposing of your old car, a great pain. Why
is it that when you bought it the salesman says ‘it’s a
lovely car, we can’t get enough of them’ only to find that
in 3 years time ‘its not the right engine’ –
‘we’ve already got 3 in stock’ or ‘no-one wants
the old model any more’ – of course everything sells at a
price and we are straight back to 1) – Risk! 4)
Using
ourselves as brokers to arrange the contract
– this means that we will obtain quotes, on your behalf, from
many of the numerous companies in the market place. We ensure we are
using the best supply prices and then compare the monthly rentals for
your chosen model, specification, period and mileage. The lowest rental
will usually mean that this company has the highest perception of how
much your chosen vehicle will be worth at the end of the contract
– this is where we place your business – with the company
that thinks it is going to be worth more than anyone else does! –
look back to 1) Risk – are you sure you want to take this risk
yourself? Do you feel you will be able to sell it for more than what
this, most optimistic, company expects? PERSONAL CONTRACT PURCHASE – CONTRACT PURCHASE Although
technically different, practically it is the same as Personal Contract
Hire. With Personal Contract Purchase you also have the option of
owning the vehicle at the end. Initially this could sound a better
option but it all depends on the prices of the contracts available at
that time. Some companies offer PCH but not PCP. You
pay the monthly payment over the given period and at the end you have
the option to purchase the vehicle at a preset price, this will be the
funders view of what the vehicle will truly be worth, or you can just
hand the vehicle back, subject to agreed mileage and condition. The
best of both worlds? We
always advise our private clients to look at both Personal Contract
Hire and Personal Contract Purchase. If PCP is cheaper or the same
price, go for this contract as you get the option of being able to buy
the vehicle at the end of the contract (beneficial if you can sell it
straight away for a small profit – if you don’t mind the
hassle). If PCH is cheaper, go for the hire option, why pay more every
month just to have the chance of making a profit? Sometimes
available to business users as Contract Purchase, as there is no
ability to claim back any VAT (unless the vehicle is for 100% business
use) VAT registered businesses are usually better off using Contract
Hire. Benefits 1)
Risk
– lets someone else take the risk on how much the vehicle will be
worth at the end of the agreement. Do you really want to be exposed to
the vagaries of the used vehicle market? Of
course with PCP you might also make a profit. At the end of the
contract if the vehicle is worth more than the final payment and you
can dispose of it easily you can opt to purchase the vehicle and sell
it on - best of both worlds. 2)
Bulk
Buying
– we buy either directly or through the funding companies and are
able to demand ‘fleet’ terms that can amount to thousands
of pounds worth of savings as against you approaching your local dealer
– this saving is passed back to you in the form of reduced
rentals. 3)
Disposal
– buying or at least choosing a car
can be a great pleasure, disposing of your old car, a great pain. Why
is it that when you bought it the salesman says ‘it’s a
lovely car, we can’t get enough of them’ only to find that
in 3 years time ‘its not the right engine’ –
‘we’ve already got 3 in stock’ or ‘no-one wants
the old model any more’ – of course everything sells at a
price and we are straight back to 1) – Risk! 4)
Using
ourselves as brokers to arrange the contract
– this means that we will obtain quotes, on your behalf, from
many of the numerous companies in the market place. We ensure we are
using the best supply prices and then compare the monthly rentals for
your chosen model, specification, period and mileage. The lowest rental
will usually mean that this company has the highest perception of how
much your chosen vehicle will be worth at the end of the contract
– this is where we place your business – with the company
that thinks it is going to be worth more than anyone else does! –
look back to 1) Risk – are you sure you want to take this risk
yourself?
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