Commercial Vehicle Finance

Commercial Vehicle Finance Lease

Finance Lease is a popular finance agreement for business users and commercial vehicles where Contract Hire is not suitable. On a Finance Lease agreement, you can choose to pay either the entire cost of the commercial vehicle, including interest charges, over an agreed lease period or opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle.

Finance Leasing is not available to Private Individuals but can be the preferred option for Partnerships, Limited Companies, Self Employed & Sole Traders due to the significant tax advantages.

How Does Commercial Vehicle Finance Leasing Work?

At the start of the commercial vehicle finance lease contract, usage parameters for the vehicle are agreed, and providing they do not vary, monthly payments and interest rates are fixed for the duration of the contract. With a Finance Lease agreement you can benefit from fixed monthly costs without taking on the hassle of administration and operating risks. At the end of the contract, the customer can then choose to operate the vehicle under a "peppercorn agreement" but at no time will actually take ownership of the asset.
 
What Are the Benefits?

Key features and benefits for leasing commercial vehicles on finance include:

• Fixed payments for the whole agreement
• Low deposit - for just a small outlay, you can use the assets immediately
• 100% tax deductible - get back between 18% & 40% of your total payments back (including your deposit)
• Flexible repayment structure tailored to match your cash flow
• Fixed or variable interest options - you decide which suits you best
• Tax advantages - VAT is payable on the rentals, not the purchase price, while payments can normally be offset against taxable profit (special rules apply to cars)
• No penalty charges for additional mileage or damage at the end of the agreement
• Although the customer does not own the vehicle, they receive 98% of the sale proceeds. Where a ’balloon rental’ has been introduced, these proceeds are utilised to help clear the rental.

Find out more about vehicle finance leasing, contact us today.

Contract Hire an Alternative Option for Commercial Vehicle Financing

Contract Hire (or Operating Lease) is a funding method suitable for those companies and individuals registered for VAT – up to 100% of VAT can be reclaimed provided there is no element of personal use. If the vehicle is used personally then this figure drops to 50% and the vehicle is hired for an agreed period of time, usually between 12 and 60 months and a rental is paid based on a pre agreed mileage.

Contract Hire can include full maintenance including all wearable items such as tyres and brakes etc. At the end of the contract the commercial vehicle is simply returned to the finance company so alleviating any disposal hassles or depreciation risks. Also up to 100% of rentals can be offset against taxable profits.

Key Benefits of Contract Hire:
 

• Road Fund Tax - Vehicle Excise Duty for the period of the contract is included in the contract and will be sent to you automatically
   
• Fixed Monthly Rentals - The agreed rentals remain constant throughout the contract allowing easy budgeting. When calculating the rentals on an operating lease, the residual value of the asset is taken into account. This can result in monthly rentals significantly lower than you would be offered on a lease or a hire purchase agreement.

To find out more about contract hire, contact us.

Hire Purchase Agreements for Commercial Vehicles

Hire Purchase offers a straightforward way to spread the cost of your new car. You pay a fixed rate of interest and benefit from fixed monthly payments, making budgeting simple and easy.

You choose the amount of deposit you wish to pay, typically between 10%-50% of the car’s price. The remainder of the balance, together with the interest, is repaid over an agreed period (12-60 months).

The benefits of Hire Purchase when funding commercial vehicles:

• Low deposit - doesn’t tie up personal or business assets
• Fixed monthly payment – makes budgeting simple
• Flexibility - doesn't compromise your other lines of credit
• Assets - you gain ownership of the car
• Tax benefits - tax allowances for business users
• VAT free - no VAT on payments

Contact us to find out more.