Finance Product Explanations

CONTRACT HIRE

Business Contract Hire is our most popular funding option with fleets of all shapes and sizes. We arrange the purchase of the vehicles you need, and can also manage them for you. You pay an agreed, fixed monthly rental cost to the leasing company – with the option to include maintenance if you want it – and at the end of your term we arrange to return the vehicles to the leasing company.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Low initial payments available meaning cash flow is freed up for you to use elsewhere in your business

You have the option to reclaim 50% of VAT on finance rentals for business & private use (e.g. company cars) or 100% of VAT on vehicle rentals when used for business use only (e.g. company vans)

Vehicles are listed off your balance sheet

Operational costs are more predictable, so you can manage your fleet effectively

You can add ancillary services such as vehicle Maintenance, Roadside Assistance and Relief Vehicle facility

You don’t need to worry about having to sell vehicles yourself or it’s depreciation

CONSIDERATIONS

There are charges for exceeding the contracted mileage allowance

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)

With VehicleFlex Contract Hire you are able to choose from most makes and models of vehicles. And because different cars and vans depreciate at different rates, you can often lease a more prestigious vehicle than you could get when purchasing, at the same monthly cost. It’s a flexible service, too – you can change the agreed mileage or term length if you need to.

CONTRACT PURCHASE

Contract Purchase gives you the flexibility to spread the cost of a new vehicle over a pre-determined period, after which you have the option to either own the vehicle outright or return it to the leasing company.

We arrange the purchase of the vehicles you need. You then pay a fixed monthly sum to the leasing company for the duration of your agreed period. At the end of this term, you’ll have the option to purchase each vehicle by making a final ‘balloon’ payment based on its residual value. Alternatively, we can arrange for the vehicle to be returned to the leasing company.

Contract Purchase agreements can benefit from optional maintenance and services if you need it.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Enjoy predictable fleet costs that are easier to manage

No risk regarding uncertain Residual Value at the end of the vehicle term

Option to purchase the vehicle for a pre-agreed cost at the end of the agreement

Ideal for commercial vehicles since VAT can be fully reclaimed up front based on the vehicle purchase price

Suitable for company cars if your company is restricted in the amount of VAT it can reclaim – as VAT is only chargeable on the service element of the lease

CONSIDERATIONS

No VAT recovery on company cars

On balance sheet accounting treatment

There are charges for exceeding the contracted mileage allowance

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)

FINANCE LEASE

Finance Lease offers a particularly flexible form of vehicle funding as it gives you the best of both worlds. It gives you the benefits of ownership as you can take advantage of any equity built up in the vehicle. However, you also benefit from the same manufacturer discounts, low initial payments and VAT benefits of Contract Hire.

We arrange the purchase of the vehicle you need and the vehicle is hired for a fixed monthly rental with a balloon payment, based on the estimated residual value of the vehicle at the end of the contracted term and mileage. You are responsible for disposing of the vehicle at the end of the contract or the leasing company can act as your agent in the sale.

If the sale proceeds are above the balloon payment you will retain the equity, less a small fee from the leasing company. If the sales proceeds are less than the balloon payment, then you will be liable to cover the shortfall.

It’s important to remember that the balloon payment is based on the agreed term and mileage, so excessive mileage and damage will affect the re-sale value and may therefore create a deficit against the balloon.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Low initial payments available

You have the option to reclaim 50% of VAT on finance rentals for business & private use (e.g. company cars) or 100% of VAT on vehicle rentals when used for business use only (e.g. company vans)

You enjoy a predictable cash flow for the contract duration

You can add ancillary services such as vehicle Maintenance, Roadside Assistance and Relief Vehicle facility

It is possible to pay most of the finance rentals up front, which accelerates your VAT recovery and reduces your interest payments as a result

Refinancing the balloon is an option prior to end of agreement

CONSIDERATIONS

You bear the residual value risk

Vehicles are listed on your balance sheet

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)

FLEXIBLE LEASE

Flexible Lease is a form of Finance Lease, however, there is no balloon payment at the end of the agreement. It gives you the benefits of ownership as you can take advantage of any equity built up in the vehicle. However, you also benefit from the same manufacturer discounts, low initial payments and VAT benefits of Contract Hire.

At the end of the agreement period it is your responsibility to sell the vehicle to a third party. However, due to the lack of balloon payment, you will retain all the sales proceeds less a small fee. This allows you to utilise the sales proceeds as an initial payment for your next vehicle.

Flexible Lease proves popular for users where the vehicle will experience heavy usage and therefore its resale value may be affected. It therefore avoids any issues with any shortfall from sales proceeds against the balloon payment.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Low initial payments available

You have the option to reclaim 50% of VAT on finance rentals for business & private use (e.g. company cars) or 100% of VAT on vehicle rentals when used for business use only (e.g. company vans)

You enjoy a predictable cash flow for the contract duration

You can add ancillary services such as vehicle Maintenance, Roadside Assistance and Relief Vehicle facility

It is possible to pay most of the finance rentals up front, which accelerates your VAT recovery and reduces your interest payments as a result

Equity from vehicle sale can be utilised as initial payment on future lease agreement

CONSIDERATIONS

LEASE PURCHASE

A Lease Purchase agreement is similar to a Hire Purchase agreement, however, it is only available to business users and there is a balloon payment at the end of the agreement. With a Lease Purchase agreement, the vehicle is leased for a fixed monthly payment with the balloon payment at the end of the agreement, where you will then take ownership of the vehicle. The agreement requires a deposit, which can be adjusted to increase or decrease the monthly payments.

This allows you to take advantage of the immediate cash flow benefits of leasing but gives your company ownership of the vehicle at the end of the agreed term for a known cost.

THE KEY FEATURES:

BENEFITS

Low initial payments available

You enjoy a predictable cash flow for the contract duration

A balloon payment reduces your monthly payments for the vehicle

Equity from vehicle sale can be utilised as deposit on future lease agreement

CONSIDERATIONS

Enhanced manufacturer discounts are not available – therefore payments will be higher

Vehicles are listed on your balance sheet

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)

PERSONAL CONTRACT HIRE

Personal Contract Hire (PCH) is our most popular funding option with private individuals or business users opting to take a cash allowance. We arrange the purchase of the car you need, all the paperwork and delivery to your home or office. You pay an agreed, fixed monthly rental cost to the leasing company – with the option to include maintenance if you want it – and at the end of your term we arrange to return the vehicles to the leasing company.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Low initial payments available meaning your savings aren’t impacted

Costs are fixed for the term of the agreement

You can add ancillary services such as vehicle Maintenance, Roadside Assistance and Relief Vehicle facility

You don’t need to worry about having to sell vehicle yourself or it’s depreciation

CONSIDERATIONS

There are charges for exceeding the contracted mileage allowance

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)

With VehicleFlex Personal Contract Hire you are able to choose from most makes and models of vehicles. And because different cars and vans depreciate at different rates, you can often lease a more prestigious vehicle than you could get when purchasing, at the same monthly cost. It’s a flexible service, too – you can change the agreed mileage or term length if you need to.

PERSONAL CONTRACT PURCHASE

Personal Contract Purchase (PCP) gives you the flexibility to spread the cost of a new vehicle over a pre-determined period, after which you have the option to either own the vehicle outright or return it to the leasing company.

We arrange the purchase of the car you need, arrange the paperwork and delivery to your home or workplace. You then pay a fixed monthly sum to the leasing company for the duration of your agreed period. At the end of this term, you’ll have the option to purchase each vehicle by making a final ‘balloon’ payment based on its residual value. Alternatively, we can arrange for the vehicle to be returned to the leasing company.

Personal Contract Purchase agreements can benefit from optional maintenance and services if you need it.

THE KEY FEATURES:

BENEFITS

Enhanced discount from manufacturers reduce the monthly rentals

Low initial payments available meaning your savings aren’t impacted

Costs are fixed for the term of the agreement

No risk regarding uncertain Residual Value at the end of the vehicle term

I Option to purchase the vehicle for a pre-agreed cost at the end of the agreement

CONSIDERATIONS

There are charges for exceeding the contracted mileage allowance

Cancelling the finance agreement early will be noted on your credit file

There are cost implications if you terminate your funding agreement early (although this applies to all forms of funding)