Realising the dream of owning and maintaining can seem daunting. Here at Specialist Cars of Malton, we aim to help you make the best decision based on your circumstances. Naturally we can only give examples so we ask you to contact us if you would like a specific quotation.
We have access to the UK’s best finance brokers. We are confident that we can find you a best deal quote, (in many cases even if the car is purchased elsewhere!)
Call immediately but we do advise you at least look at the other options available, you could save more than you think!
- Hire Purchase
- Lease Purchase
- Finance Leasing
- Personal Contract Purchase
- Contract Purchase
Hire Purchase
Hire purchase is a simple and popular way of purchasing a vehicle, with worthwhile tax advantages for businesses. If ownership is a priority, this is an extremely cost effective method of borrowing.
Cashflow Benefits
Paying an initial deposit, calculated as a percentage of the total cost this is followed by fixed monthly repayments; which allows you to budget monthly expenditure precisely in advance.
Tax Implications
Business users may claim tax relief on the interest charged. The vehicle is also classified as an asset, which allows it to be written down against taxable profits by 25% or £3000 (maximum per annum).Who Owns The Vehicle At The End Of The AgreementAt the end of the agreement, which may be from 1 to 5 years, you become the outright owner of the vehicle.
Lease Purchase
This is similar to hire purchase but has greater flexibility.
Cashflow Benefits
The initial deposit is normally expressed as monthly payments in advance and is much lower than traditional HP, and a final lump sum or balloon payment (sometimes called a residual value) is usually included. This has the effect of reducing the amount of the monthly payments, aiding cash flow.
Tax Implications
The tax and financial benefits are the same as hire purchase, but the payments can be structured to suit a businesses particular cash flow needs.
Who Owns The Vehicle At The End Of The Agreement
After making the balloon payment, ownership of the vehicle can be taken, or it can be part exchanged - using any surplus equity towards a deposit for a new vehicle.
Finance Leasing
This can be one of the most cost effective options, if you need full use of a vehicle for minimum outlay but do not require final ownership.
Cashflow Benefits
By leasing your vehicle valuable savings can be made. A finance lease can be extremely flexible. Rentals can be paid monthly, quarterly or annually throughout the lease period (usually 2 to 5 years). The initial deposit is normally expressed as monthly rentals in advance and a final lump sum balloon payment (sometimes called a residual value) is usually included. This has the effect of reducing the amount of the monthly rental, aiding cash flow.
Tax Implications
The rentals can be offset against taxable profits. If you are VAT registered, 100% of the VAT payable on the rentals can be reclaimed for any commercial vehicle or car used exclusively for business purposes. 50% of the VAT can be reclaimed for a car used for both business and private mileage.
Who Owns The Vehicle At The End Of The Agreement
At the end of the lease the vehicle is sold and the sale proceeds (less a nominal sum) are refunded to you as a rebate of rentals, which attract VAT. Due to its low initial outlay, fixed costs throughout the rental period, excellent tax efficiency and flexibility, finance lease is favoured by many business users.
Personal Contract Purchase
Personal Contract Purchase (PCP) is a new product developed to enable individuals to finance their vehicle whilst still retaining some or all of the benefits associated with a company car. As the agreement is written in your name the normal “benefit in kind tax liability” doesn’t apply. This facility can also be offered to those employees not normally entitled to a company car. Low deposit followed by a fixed monthly charge means that it is easy to budget for and it is possible to provide all-inclusive maintenance and breakdown packages.
Who Owns The Vehicle At The End Of The Agreement
The vehicle is supplied for a set period of time at a fixed rental. At the end of the agreement the driver may purchase the vehicle by paying the balloon payment (guaranteed future value) or simply return it to the finance company.
Contract Purchase
This option is similar to lease purchase but with even greater flexibility. It is designed to give all the operational benefits of contract hire including maintenance, Road Fund Licence and relief vehicle, without the VAT implications of a lease. It therefore appeals to professions and businesses that are not VAT registered, and individuals who wish to opt out of their company car scheme.
Cashflow Benefits
The initial deposit is normally expressed as monthly payments in advance and is followed by fixed monthly payments, you know exactly what your monthly motoring costs will be.
Tax Implications
The tax and financial benefits are the same as lease purchase or hire purchase.Who Owns The Vehicle At The End Of The AgreementThe final balloon payment is a guaranteed future value. You have the option of either taking ownership, disposing of the vehicle yourself (if you wish to take advantage of a profit opportunity) or simply returning the vehicle to the finance.
