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On this page you will find details regarding Finance or Leasing Cars and Commercial Vehicles  (Vans) by either  Contract Hire (CH)Personal Contract Hire (PCH)Personal Contract Purchase (PCP)Contract Purchase (CP)

CONTRACT HIRE

Available to any Business User.

With Contract Hire you pay an amount each month for the use of the chosen vehicle. The cost per month is directly related to how much the vehicle will depreciate over the period. Each funding company’s rental will be based on the cost of the vehicle (the funders will receive excellent fleet discounts) and how much that company feels the vehicle will be worth at the end of the contract, taking into account the period and the mileage to be covered. Each company’s view of a vehicles future value can vary dramatically and will result in, sometimes vast, differences in the monthly rentals you pay. Some vehicles, that hold their value well could cost less per month than vehicles with a lower initial cash price.

At the end of the contract, just hand the vehicle back, subject to mileage and condition. Each contract is calculated using the number of miles you expect to drive each year. If this is exceeded then you pay an additional mileage charge (pence per mile). Contracts can usually be amended if necessary to accommodate changing circumstances. Maintenance can be included to cover all servicing costs, tyres, batteries, wiper blades etc.

VAT is payable on the monthly rentals. For VAT registered businesses 50% of the VAT is reclaimable on the vehicle element of any car contract (100% for commercial vehicles or if the car is used 100% for business use), 100% of the VAT is always reclaimable on the maintenance element. This is a major benefit as, if you purchase a car outright, you can only claim the VAT paid if there is absolutely no personal use.

Sometimes referred to as an Operating Lease.

Benefits

The age old ‘benefitsof contract hire would read as follows:

1)      Spreads the cost, so improves cash flow

2)      Preserves existing credit lines

3)      Off balance sheet funding

4)      Improves gearing ratio

This might excite the financial directors amongst us – but for the rest of us the real benefits of Contract Hire are:

1)     Risk – lets someone else take the risk on how much the vehicle will be worth at the end of the agreement. Do you really want to be exposed to the vagaries of the used vehicle market?

2)     VAT – you can claim back 50% of the VAT on the finance element (as the majority of vehicles have some form of personal use) of car Contract Hire, (100% of the VAT for any maintenance costs) – compare this to not being able to claim anything if you purchase it. So on a 3 year deal (3 rentals followed by 35) at £400 + VAT per month you could save £ 1330 straight away. For commercial vehicles up to 100% of the VAT is reclaimable subject to Inland Revenue restricting this figure for personal use. N.B. Please see Vehicles and VAT for more information.

3)     Bulk Buying – we buy either directly or through the funding companies and are able to demand ‘fleet’ terms that can amount to thousands of pounds worth of savings as against you approaching your local dealer – this saving is passed back to you in the form of reduced rentals.

4)      Disposal – buying or at least choosing a car can be a great pleasure, disposing of your old car, a great pain. Why is it that when you bought it the salesman says ‘it’s a lovely car, we can’t get enough of them’ only to find that in 3 years time ‘its not the right engine’ – ‘we’ve already got 3 in stock’ or ‘no-one wants the old model any more’ – of course everything sells at a price and we are straight back to 1) – Risk!

5)   Using ourselves as brokers to arrange the contract – this means that we will obtain quotes, on your behalf, from many of the numerous companies in the market place. We ensure we are using the best supply prices and then compare the monthly rentals for your chosen model, specification, period and mileage. The lowest rental will usually mean that this company has the highest perception of how much your chosen vehicle will be worth at the end of the contract – this is where we place your business – with the company that thinks it is going to be worth more than anyone else does! – look back to 1) Risk – are you sure you want to take this risk yourself? Do you feel you will be able to sell it for more than what this, the most optimistic company, expects?

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PERSONAL CONTRACT HIRE

This is for information only - we do not currently offer Personal Contract Hire

Contract Hire but available to the private individual, the only difference is that as you are not VAT registered you can’t claim back the VAT, as in any car purchase.

Can be ideal for people opting out of a company car scheme or wishing to pay for the use of the vehicle without the risk and hassle involved in vehicle disposal at the end.

With Personal Contract Hire you pay an amount each month for the use of the chosen vehicle. The cost per month is directly related to how much the vehicle will depreciate over the period. Each funding company’s rental will be based on the cost of the vehicle (the funders will receive excellent fleet discounts) and how much that company feels the vehicle will be worth at the end of the contract, taking into account the period and the mileage to be covered. Each company’s view of a vehicles future value can vary dramatically and will result in, sometimes vast, differences in the monthly rentals you pay. Some vehicles, that hold their value well, could cost less per month than vehicles with a lower initial cash price.

At the end of the contract, just hand the vehicle back, subject to mileage and condition. Each contract is calculated using the number of miles you expect to drive each year. If this is exceeded then you pay an additional mileage charge (pence per mile). Contracts can usually be amended if necessary to accommodate changing circumstances. Maintenance can be included to cover all servicing costs, tyres, batteries, wiper blades etc.

Benefits

1)      Risk – lets someone else take the risk on how much the vehicle will be worth at the end of the agreement. Do you really want to be exposed to the vagaries of the used vehicle market?

2)      Bulk Buying – we buy either directly or through the funding companies and are able to demand ‘fleet’ terms that can amount to thousands of pounds worth of savings as against you approaching your local dealer – this saving is passed back to you in the form of reduced rentals.

3)      Disposal – buying or at least choosing  a car can be a great pleasure, disposing of your old car, a great pain. Why is it that when you bought it the salesman says ‘it’s a lovely car, we can’t get enough of them’ only to find that in 3 years time ‘its not the right engine’ – ‘we’ve already got 3 in stock’ or ‘no-one wants the old model any more’ – of course everything sells at a price and we are straight back to 1) – Risk!

4)      Using ourselves as brokers to arrange the contract – this means that we will obtain quotes, on your behalf, from many of the numerous companies in the market place. We ensure we are using the best supply prices and then compare the monthly rentals for your chosen model, specification, period and mileage. The lowest rental will usually mean that this company has the highest perception of how much your chosen vehicle will be worth at the end of the contract – this is where we place your business – with the company that thinks it is going to be worth more than anyone else does! – look back to 1) Risk – are you sure you want to take this risk yourself? Do you feel you will be able to sell it for more than what this, most optimistic, company expects?

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PERSONAL CONTRACT PURCHASE – CONTRACT PURCHASE

This is for information only - we do not currently offer Personal Contract Purchase

Although technically different, practically it is the same as Personal Contract Hire. With Personal Contract Purchase you also have the option of owning the vehicle at the end. Initially this could sound a better option but it all depends on the prices of the contracts available at that time. Only a few companies now offer a PCP option.

You pay the monthly payment over the given period and at the end you have the option to purchase the vehicle at a preset price, this will be the funders view of what the vehicle will truly be worth, or you can just hand the vehicle back, subject to agreed mileage and condition. The best of both worlds?

We always advise our private clients to look at both Personal Contract Hire and Personal Contract Purchase. If PCP is cheaper or the same price, go for this contract as you get the option of being able to buy the vehicle at the end of the contract (beneficial if you can sell it straight away for a small profit – if you don’t mind the hassle). If PCH is cheaper, go for the hire option, why pay more every month just to have the chance of making a profit?

Sometimes available to business users as Contract Purchase, as there is no ability to claim back any VAT (unless the vehicle is for 100% business use) VAT registered businesses are usually better off using Contract Hire.

Benefits

1)      Risk – lets someone else take the risk on how much the vehicle will be worth at the end of the agreement. Do you really want to be exposed to the vagaries of the used vehicle market?  Of course with PCP you might also make a profit. At the end of the contract if the vehicle is worth more than the final payment and you can dispose of it easily you can opt to purchase the vehicle and sell it on  - best of both worlds.

2)      Bulk Buying – we buy either directly or through the funding companies and are able to demand ‘fleet’ terms that can amount to thousands of pounds worth of savings as against you approaching your local dealer – this saving is passed back to you in the form of reduced rentals.

3)      Disposal – buying or at least choosing  a car can be a great pleasure, disposing of your old car, a great pain. Why is it that when you bought it the salesman says ‘it’s a lovely car, we can’t get enough of them’ only to find that in 3 years time ‘its not the right engine’ – ‘we’ve already got 3 in stock’ or ‘no-one wants the old model any more’ – of course everything sells at a price and we are straight back to 1) – Risk!

4)      Using ourselves as brokers to arrange the contract – this means that we will obtain quotes, on your behalf, from many of the numerous companies in the market place. We ensure we are using the best supply prices and then compare the monthly rentals for your chosen model, specification, period and mileage. The lowest rental will usually mean that this company has the highest perception of how much your chosen vehicle will be worth at the end of the contract – this is where we place your business – with the company that thinks it is going to be worth more than anyone else does! – look back to 1) Risk – are you sure you want to take this risk yourself?

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