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Finance Options

HIRE PURCHASE

Hire purchase requires you to put down an initial deposit, this is usually the full VAT followed by fixed monthly repayments. These repayments typically range between 24 and 60 months. At the end of the contract or sooner, having paid all the payments outstanding plus any option to purchase fee, you will own the vehicle.

Advantages

  • Ownership at the end of the agreement
  • Interest rates will remain the same throughout the agreement
  • Settle the agreement at any stage
  • Monthly payments are not subject to VAT
  • No damage or excess mileage recharges at end of agreement.

Disadvantages

  • You are liable for the full value of the vehicle
  • There is no hand back option at the end of the agreement
  • (Light Commercial Vehicle) for buyers the full amount of the VAT must be paid up front.
  • Monthly payments tend to be higher as there is no final balloon payment

FINANCE LEASE

Finance lease requires you to put down an initial rental followed by a fixed term and mileage consideration with contract options between 24 months (2 Years) and 60 months(5 Years), usually followed by a ‘final rental’ or ‘balloon’.

At the end of the agreement, the final balloon is paid off by the sale of the vehicle and these funds are used towards settling any outstanding finance.

Although there are mileage considerations that determine the ‘final rental’, mileage penalties from the finance provider are not applicable, exceeding the mileage agreed will have an effect of the final value of the vehicle but will incur no penalties.

Advantages

  • Fixed monthly payment (rental)
  • No damage recharge as you are responsible for the disposal of the vehicle
  • Commercial vehicles are up to 100% tax deductible
  • No need to be VAT Registered
  • Finance terms from 24(2 years) to 60 months (5 Years)
  • Low deposit options available.

Disadvantages

  • The responsibility of the vehicle disposal is down to the hirer along with associated depreciation risks
  • You must have fully comprehensive insurance throughout the duration of the contract

LEASE PURCHASE

Lease purchase requires you to put down an initial deposit, this is usually the full VAT followed by fixed monthly repayments with the option of a final payment (balloon).

These repayments typically range between 24 and 60 months. At the end of the contract, or sooner, having paid all of the payments, including the optional final payment (balloon) along with any option to purchase fee, you will own the vehicle.

Advantages

  • Ownership at the end of the agreement
  • You can lower the monthly payment by adding an optional final payment (Balloon)
  • Fixed interest rates
  • Early settlement of the agreement is possible
  • Monthly payments are not subject to VAT
  • No damage or excess mileage recharges at end of agreement.

Disadvantages

  • You are liable for the full value of the vehicle
  • You are unable to hand the vehicle back at the end of the agreement
  • The final Balloon can be large and would therefore need to be budgeted for. For LCV (Light Commercial Vehicle) the full amount of the VAT must be paid in full.