Cutting costs

Vehicle Funding

Vehicle Funding For The Business User

Contract Hire

Contract hire is our most popular type of vehicle finance and is a good choice if you want to avoid the risk and hassle of buying, servicing and disposing of fleet vehicles.

How does it work?

Subject to terms and conditions, you hire a vehicle from us for a set period and pay a fixed monthly rental. At the end of the contract, you simply return the vehicle to us. You enjoy all the benefits of using the vehicle and we retain all the risks of owning it.

Benefits

1. Easier budgeting:
Vehicle rental costs are a known entity from the outset. You can also include all maintenance costs and full RAC breakdown recovery in the fixed rental, leaving you just the fuel and insurance budgets to set.
2. Smoother cashflow:
The cost of vehicle acquisition is spread monthly over the length of the contract. There is only a small initial payment, typically equivalent to three months rental, and no final balloon payment.
3. Less administration:
We handle all the administration of supplying, servicing and disposing of vehicles, which frees up resources for your core business.
4. Flexible contract:
The length of contracts can be tailored to your needs and budget from the outset. They can also be adjusted during a contract, if you want, to reflect the changing nature of your business.
5. Reduced financial risk:
You don’t have to worry about residual values, interest rates and, if it suits you, maintenance costs and relief vehicles. They are all our responsibility.
6. Off balance sheet funding:
Contract hire vehicles do not appear on your company’s balance sheet. This can improve your borrowing potential, which can then be invested more effectively in your core business.
7. VAT advantages:
We reclaim VAT on every vehicle we buy and pass that saving on to you in the form of lower rentals. Once the vehicle is on the road, you can claim back 100% of the VAT on the servicing element of your rental and 50% of the VAT on the finance aspect.

Contract Purchase

A smart choice for financing the more expensive vehicles on your fleet and for companies that are restricted in the amount of VAT they can reclaim.

How does it work?

We supply you with the vehicle for a set period and you pay a fixed amount each month. At the end of the contract, you have the option of either owning the vehicle by making a balloon payment, or simply returning it to us with nothing more to pay. If you return it and we sell it for more than the balloon payment amount, you receive an element of the profits. If we sell it for less, we absorb the loss.

Benefits

  1. Tax advantages of ownership throughout the contract, such as claiming capital allowance
  2. The option to take full legal ownership at the end of the contract
  3. Low initial payment, typically equivalent to three monthly finance payments
  4. Removes financial risks associated with vehicle disposal if you hand the vehicle back
  5. Maintenance cover and full RAC breakdown and recovery service and relief vehicle can be included in the fixed monthly rate
  6. Fixed monthly outgoings for easier budgeting
  7. Flexible contracts to suit changing circumstances in your business

Contract purchase offers all of the operational, managerial and administrative benefits of contract hire, together with the tax-efficient benefits of ownership.

Hire Purchase

How does it work?

We supply the vehicle, you pay a monthly amount for an agreed period and ultimately you own the vehicle. The details of the agreement can be tailored to your needs and budget, based on the larger initial payment and/or final balloon payment and a range of variable and fixed interest rate plans.

Benefits

  1. Lower initial outlay than outright cash purchase
  2. The vehicle appears as an asset on your balance sheet
  3. You can claim capital allowances
  4. A choice of fixed or variable interest rates
  5. Interest on repayments can usually be offset against taxable profits.

There can be drawbacks, though. Monthly repayments are normally higher than with contract purchase and you cannot reclaim VAT on the vehicle’s purchase price.

You are responsible for all the risks of owning, administering, running, maintaining and disposing of the vehicle.

Additional services, such as maintenance, RAC cover and third-party fleet management, are not included, although we can provide these for a fixed monthly cost.

Finance Lease

This can be a potentially tax-efficient way to fund vehicles for companies who are willing to take on the risks of vehicle disposal.

How does it work?

You pay a sum each month for an agreed period to use the vehicle. The sum can be fixed or variable. At the end of the contract, you are responsible for reselling the vehicle.

Benefits

  1. Similar VAT and corporation tax benefits to contract hire
  2. Low initial payment
  3. A choice of fixed or variable interest rates
  4. Rentals can usually be offset against taxable profits
  5. Reduced capital outlay since we reclaim the VAT and pass it on to you in the form of lower monthly rentals.

You need to balance these benefits against the cost of monthly rentals, which are usually higher than for contract hire, and the financial risks of reselling the vehicle in a potentially volatile used market.

You also need to factor in the administrative cost of reselling. Additional services, such as maintenance, RAC cover and third-party fleet management, are not included, although we can provide these for a fixed monthly cost.