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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, 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
possibility of 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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