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With Hire Purchase, you pay a deposit. The actual amount is negotiable. The remaining amount (plus interest charges) is repaid in regular monthly payments. You can also choose from fixed or variable interest rates.
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Main benefits: |
- Ownership of vehicle
- Flexible deposit
- Repayments over a fixed period
- Fixed or variable interest rates
- Repayments in advance or arrears
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Benefits to business: |
- Payments not subject to VAT
- Interest may be allowable against taxable profits
- Writing down allowances are claimable
- Vehicle appears as an asset on the balance sheet
- Additional line of credit
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You pay a deposit and you own the vehicle at the end of the agreement period. However, by opting to make a "balloon payment" at the end of the agreement your monthly payments are significantly reduced.
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Main benefits: |
- Reduced monthly payments by opting for a final balloon payment
- Flexible deposit
- Ownership of vehicle
- Repayments over a fixed period
- Fixed or variable interest rates
- Repayments in advance or arrears
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Key Business Benefits: |
- Payments not subject to VAT.
- Interest may be allowable against taxable profits.
- Writing down allowances are claimable.
- Your Car appears as an asset on the balance sheet.
- Additional line of credit
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With contract hire your vehicle is hired to you for a fixed period. Monthly payments are based on the difference between the price of the vehicle at the start of the agreement and its projected residual value, plus finance charges. Thus only a proportion of the vehicle’s value is repaid, which avoids any large initial outlay and reduces the average monthly payment. At the end of the lease period, the vehicle is simply returned, thus freeing you from any further obligations (apart from an excess mileage charge if the estimated mileage has been exceeded or damage charges over and above fair wear and tear.
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Main Benefits: |
- Eliminates capital expense through use of vehicle without ownership
- Improved cash flow with fixed monthly rentals
- Off balance sheet finance
- Rentals allowable against taxable profits (proportionally)
- Reduced monthly rentals
- No worry or risk at the end of the agreement as you just give it back
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PERSONAL CONTRACT PLAN (PCP)
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A flexible solution whereby the car is hired to you for your chosen period and mileage with the option of including servicing and maintenance in a fixed rental. The risks of ownership are carried by the manufacturer. The car's projected residual value at the end of the contract period is determined. Monthly rentals are based on the difference between this and the Car's price at the start of the agreement, plus finance charges. At the end of the lease period, you return the car without the worry of disposal (subject to excess mileage or damage charges). |
Main Benefits: |
- By including a residual value guaranteed by the finance company, your monthly rentals are reduced.
- Peace of mind to give you a fixed monthly outgoing covering depreciation and all of your selected services
- The choice at the end of the agreement to either purchase the vehicle, re-financing the final figure, part exchanging the vehicle for a new one or simply hand the vehicle back to the finance company with nothing further to pay.
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Please note - finance agreements often incur a one-off documentation fee, due at the start of the contract. Please be assured that this is not a charge made by VanPeople.co.uk, and indeed is common in the field of vehicle financing.
