Products & Services

The information detailed below is to assist you in determining what product best suits your needs. We offer the full range of products listed and do not recommend any in particular as they all have advantages and disadvantages, depending on your specific business requirements. If in doubt, you may wish to discuss with your financial adviser or accountant about which funding method suits you best.


Contract Hire

What is this?

Contract Hire, sometimes referred to as an Operating Lease, is a long term rental agreement. Contracts range from 24 to 60 months and are tailored to the business’ requirements. The contract hire company (also known as the 'funder') reclaims the VAT on the purchase of the vehicle. This in turn reduces your monthly rentals (which are subject to VAT). Contract Hire is a very popular choice for VAT registered companies as they can claim back 50% of the VAT on the finance element for cars, and generally 100% for commercial vehicles (assuming no private use, no exempt turnover and not being on the Flat Rate VAT Scheme). On contracts where maintenance is included the VAT on the service element is 100% recoverable.  

The contract hire company retains ownership of the vehicle, so it stays 'off the balance sheet' of your company. Your gearing ratio (assets to borrowing ratio) may improve as a result, therefore possibly preserving your borrowing ability in the future. There is also no need to worry about disposing of the vehicle at the end of the contract as it will simply be returned, the future value having been underwritten by the contract hire company. 


Who is Contract Hire suitable for?

Contract Hire is a good option for limited companies, sole traders and business partnerships.


Advantages of Contract Hire:

** Minimum capital expenditure  

** Accurate monthly budgeting

** Improved cash flow

** Fixed interest rates

** Rentals can be offset against the businesses profits (subject to CO2 values)

** No vehicle disposal problems

** Reduced administration

** On-going advice and support

** Road Fund Licence provided (vehicle excise duty paid) for duration of contract

**Optional maintenance package

** Optional breakdown and recovery  

** Optional replacement vehicle cover in event of a major breakdown



Points to bear in mind: 

** Early termination can be expensive  

** There is an excess mileage fee for each mile you do over and above that stated in your contract

** You must look after the vehicle and return it in a well maintained condition, otherwise you will be charged for any damage over and above that stated in the ‘Fair Wear and Tear Guide’

** You must have fully comprehensive vehicle insurance

** You will never own the vehicle as there is no option to buy it



Finance Lease 

What is this?

Finance Lease is a method of financing a vehicle that is usually favoured by those requiring commercial vehicles and by VAT registered businesses. The business obtains use of the vehicle by paying a rental each month. The monthly rental is determined by the initial cost of the vehicle (excluding VAT), the period of the Finance Lease and the residual value (often called the balloon payment), plus interest. Although you never take ownership, at the end of the Finance Lease contract a rental equivalent to the balloon payment is payable. Usually this means that the vehicle is sold and a proportion of the proceeds of the sale are returned to the lessee.

Most Finance Lease companies will offer a number of payment options to suit your cash flow. You can lower the monthly rental with a higher balloon payment at the end of the contract, or you can pay the entire cost in monthly rentals (normally referred to as a 'fully amortised Finance Lease'), in which case you may be able to extend the Finance Lease with a secondary period of rental (sometimes called a peppercorn rental).


Advantages of Finance Lease: 

** Minimum capital expenditure  

** Accurate monthly budgeting  

** A fixed interest rate is available on some contracts  

** No damage recharges apply, the value of the vehicle at the end of the contract is reflected in the size of the balloon payment  

** VAT registered companies can claim back 50% of the VAT on the finance element for cars and generally 100% for commercials (subject to no private use). On contracts with maintenance the VAT on the service element is 100% recoverable  

** Rentals can be offset against the businesses profits 

** Optional maintenance package  

** Optional breakdown and recovery  

** Optional replacement vehicle cover in event of a major breakdown  


Points to bear in mind: 

** You will never own the vehicle as it must be sold to a third party at the end of the agreement  

** Operating risk associated with running the vehicle  

** Maintenance cannot be added to the contract, you are responsible for servicing costs

** Interest rates can vary on some contracts  

** You must have fully comprehensive vehicle insurance

** The better the condition of the vehicle at the end of the contract, the lower your balloon payment will be


 


Contract Purchase 

What is this?

Contract Purchase is a type of finance agreement for business customers looking to fund a new vehicle in a manageable way. The monthly payments are not subject to VAT, but you will have to pay VAT on any optional services. Contract Purchase is ideal for any business that would like options at the end of its finance agreement. 


How does it work? 

Customers make an initial payment followed by fixed monthly payments for the duration of the contract. At the end of the contract you can choose from the following options:

  1. make an Optional Final Payment (OFP) also known as the GFV (Guaranteed Future Value) in order to own the vehicle outright. 
  2. trade in your vehicle at a dealership and take another vehicle from them. If the trade-in value is larger than the OFP you will be able to use the difference towards a deposit on your new vehicle. 
  3. simply return the vehicle to the lease company. As long as you have not exceeded the agreed mileage figure and the vehicle is in an appropriate condition for its age there will be no additional charges. 


Advantages of Contract Purchase: 

** Low initial payment  

** Fixed monthly payments  

** You may be able to refinance the OFP  

** No depreciation concerns if you wish to walk away at the end  

** Maintenance and servicing can be included  

** Fixed OFP when you start the contract  

** Cost effective  


Points to bear in mind:

** At the end of the contract you will have to decide whether you wish to sell the vehicle, return it or keep it  

** You must have fully comprehensive vehicle insurance  

Lease Purchase 

What is this?

Lease Purchase is for people who would like to own a vehicle but do not necessarily have the money to buy one immediately. It is ideal for non VAT registered customers who eventually wish to take ownership. It is a flexible product and it is possible to put down a larger initial payment, which in turn reduces your monthly payments. The monthly cost is worked out on the difference between the retail value and the depreciation value plus interest.  

The main difference between Lease Purchase and Contract Purchase is that you have already chosen to purchase the vehicle at the end of a Lease Purchase contract, instead of having the choice to purchase the vehicle at the end of a Contract Purchase contract. Lease Purchase is only for those who are absolutely sure that they want to take ownership of the vehicle at the end of the contractual period, and are prepared to pay any balloon payments associated with the contract. Lease Purchase agreements typically run between 24 and 60 months, although the agreement can be settled at any time.


Advantages of Lease Purchase: 

** A way of buying a vehicle without paying the whole cost in one go** Low initial payment  
** Fixed mileage contract  
** Ideal for non-VAT registered customers who want eventual ownership of the vehicle  
** Flexibility. Larger initial payment means lower monthly rentals  
** Monthly payments are not subject to VAT  
** The vehicle is a company asset for balance sheet purposes  
** Lease Purchase frees up your capital for other business uses
Disadvantages of Lease Purchase: 
**The balloon payment must be paid for at the end of the contract  
**The vehicle is yours once you have paid the balloon payment. In some cases the balloon can be higher than its value at the end of the contract  
**You must have fully comprehensive vehicle insurance  



Personal leasing is for individuals who want to pay for a lease contract themselves, not through a business. The information detailed below is to assist you in determining which financial product best suits your needs. We can offer either option but don't recommend any in particular as they all have advantages and disadvantages based on your specific requirements. If in doubt, you may want to discuss with your financial advisor or accountant about which funding method suits you best.


Personal Contract Hire

What is this?

Personal Contract Hire (PCH) is a fixed term contract where customers pay an agreed monthly rental for the use of a vehicle for a set period of time. It benefits customers wishing to eliminate the financial risk associated with disposal of a vehicle. A fixed mileage will be agreed at the start of the process. A small additional maintenance charge can be added to your agreement to give you breakdown cover and minimise the hassle of servicing and tyre replacements.


How long is the contract?

Contracts are usually two, three or four years in duration, whichever suits you best. Some contracts can be formally extended if required.  


What are the advantages of Personal Contract Hire?

** Flexible initial payment 

** Fixed term contract

** Flexible term and mileage to suit your requirements

** You only pay for the use of the vehicle

** At the end of your contract you simply hand the vehicle back

** Option of including maintenance with the contract

** No depreciation or disposal risk


Points to bear in mind:

** You will need to undergo a credit check prior to signing the contract

** You will need to pay a few months' lease upfront

** Early termination of your contract can be expensive 

** If you do more miles than stated in your contract you will be charged an additional fee for every extra mile

** You must look after the vehicle and return it in a well maintained condition in order to avoid charges for any damage over and above that stated in the BVRLA ‘Fair Wear and Tear Guide’

** You must have fully comprehensive vehicle insurance

** You will never own the vehicle as there is no option to buy it



Personal Contract Purchase

What is this?

Personal Contract Purchase (PCP) is a finance agreement for private individuals looking to fund a new vehicle in a manageable way. The monthly payments are not subject to VAT; if however you choose to add optional services then you will have to pay VAT on them. You also have the option to buy the vehicle at the end of your contract.


How does it work?

PCP customers make an initial payment followed by fixed monthly payments for the duration of the contract. At the end of the contract you can choose from the following options:

  1. make an Optional Final Payment (OFP) also known as a GFV (Guaranteed Future Value) or balloon payment, in order to own the vehicle outright. 
  2. trade in your vehicle at a dealership and take another vehicle from them. If the trade-in value is larger than the OFP you will be able to use the difference towards a deposit on your next new vehicle. 
  3. simply return the vehicle to the funder. As long as you have not exceeded the agreed mileage figure and the vehicle is in an appropriate condition for its age, there will be no extra charges. 


What are the advantages of Personal Contract Purchase?

** Low initial payment 

** Fixed monthly payments

** Fixed Optional Final Payment (OFP) so you can take ownership at the end of the contract

** You may be able to refinance the OFP

** No depreciation concerns if you wish to walk away at the end

** Maintenance and servicing can be included


Points to bear in mind: 

** You will need to undergo a credit check prior to signing the contract

** You will need to pay a few months' lease upfront

** Early termination of your contract can be expensive

** If you do more miles than stated in your contract you will be charged an additional fee for every extra mile

** If you choose to return your vehicle at the end of the contract, it must be in a well maintained condition in order to avoid extra charges

** You must have fully comprehensive vehicle insurance