Simply click on the links below to see a description of the various policies, and their key benefits for contract hire and other methods of car finance in the uk. If you require further information, please feel free to contact our staff, who will be happy to help.

• Contract Hire
• Finance Lease
  
• Lease Purchase
  
• Hire Purchase
  
• Personal Contract Purchase
  
• Gap Insurance

CONTRACT HIRE

With contract car hire, you hire the vehicle for an agreed period of time (usually between 24 & 48 months) and pay a fixed rental based on the mileage you will do over the contract period. With contract hire, you pay for the vehicle plus interest. All payments plus VAT of which 50% is recoverable. Up to 100% of the monthly rental can be offset against profits.

KEY BENEFITS

• contract hire means low deposit
• contract hire means low monthly payments, particularly on prestige cars due to strong residual values
• contract hire means fixed costs
• contract hire means maintenance can be included in monthly contract hire payments

Since August 1995, leasing companies have been able to reclaim the VAT on the purchase of cars, this means that you pay less per month because:

• the interest charges are applied to the net of VAT cost price i.e. a £20,000 car would be £17,021 without the VAT, giving substantial savings on interest charges
• the depreciation on the car is based on the net of VAT cost price, immediately saving you a significant amount of depreciation

FINANCE LEASE

Finance lease involves leasing the vehicle for an agreed period of time (usually between 24 & 48 months) and paying a fixed payment until the end of the contract. Usually a lump sum final payment is set equivalent or lower than the expected sales proceeds of vehicle (balloon payment). All payments are subject to VAT of which 50% can be reclaimed. Maintenance cannot be included with finance lease.

KEY BENEFITS

• finance lease means low deposit
• finance lease no mileage restrictions, although you will end up paying for the depreciation for the miles travelled
• finance lease offers the VAT advantages of contract hire

LEASE PURCHASE

With lease purchase, you purchase the vehicle over a period of time, deferring an amount of the purchase cost by way of a balloon payment usually equal to or lower than the expected sales proceeds at the end of the contract. This allows for lower monthly payments than with straight hire purchase. There is no VAT involved with a lease purchase agreement on a car.

KEY BENEFITS

• Lease purchase means low deposit
• Lease purchase means no mileage restrictions, although you will end up paying for the depreciation for the miles traveled
• Lease purchase means allows you to own the vehicle

HIRE PURCHASE

Hire purchase involves purchasing the vehicle over an agreed period of time. At the end of the period the vehicle is yours with nothing further to pay. There is no VAT involved with hire purchase.

KEY BENEFITS

• Hire purchase allows you to own the vehicle
• Hire purchase involves no mileage restrictions

PERSONAL CONTRACT PURCHASE or PCP

With personal contract purchase, you lease or purchase the vehicle for an agreed period of time (usually between 24 & 48 months) and you pay a fixed payment based on the mileage you will do over the contract period. At the end of the contract period you can pay an agreed final payment & take ownership of the car or simply send the car back. No VAT involved on finance payments with personal contract purchase, and VAT is applied to maintenance if taken.

KEY BENEFITS

• personal contract purchase allows for a private individual to obtain full fleet discount on the purchase of a car
• personal contract purchase allows for lower deposit and lower monthly payments than hire purchase
• personal contract purchase offers the best of both worlds
• personal contract purchase means you don't have to decide whether you want to own the vehicle until the end of the contract
• personal contract purchase allows a private individual to have a fully maintained contract

GAP INSURANCE

Gap insurance is designed to bridge the gap between an outstanding settlement figure and the amount your insurance company will pay in the event of a total loss.

The main advantages are:

• gap insurance covers up to £5,000 difference in total loss/insurance payout and finance settlement figure.
• with gap insurance, one payment covers the whole of the period of the contract
• gap insurance applies to new or used vehicles
• gap insurance offers peace of mind

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