Vehicle Lease Funding Options

Funding Options | How To Get The Most Value From Your Vehicle Fleet

At V1 Vehicle Solutions we are committed to helping you, whether you are a private individual, sole trader or a fleet operator. We can offer you advice on the most tax efficient ways to finance your vehicle, we will provide you with the correct information so that you can make an informed decision. We always recommend that after discussing our offer you talk to your accountant, they will know you and your business better and will assist you in your final decision.

The following is a summary of each of the finance package we offer, this will help you decide which is the best method for you, however, if you prefer to discuss your requirements please contact us.

To help you work out which package is the best for you, HM Customs and Excise recognise only two types of funding;

  • A Purchase agreement is where the customer has the right to obtain legal title to the vehicle. (Supply of Goods)
  • A Hire agreement is where the customer has no option to gain legal title to the goods. (Supply of Services)

We recommend that before you make your final selection that you discuss the matter with your accountant to ensure that you are selecting the correct package for your individual needs.

Contract Hire

V1 Vehicle Solutions Contract Hire is a tax efficient funding method where you hire / lease rather than own the vehicle, paying a set monthly amount for the length of the term this can be with or without a maintenance package.

Contract Hire provides ‘off balance sheet’ accounting and reclaimable VAT, and can assist with an increase of cash flow to help in the running of your company.

Under a Contract Hire contract the funded retains ownership of the vehicle at all times and therefore absorbs all unforeseen risks such as resale values.

Personal Contract Hire

V1 Vehicle Solutions Personal Contract Hire is in essence the same as the above but for private individuals / users

It provides fixed costs over an agreed period and can include Maintenance package which provides you with peace of mind for you servicing needs and requirements

This type of product provides hassle free motoring without resale value risks associated with owning a vehicle outright.

The VAT element is built into the monthly payments, but is not reclaimable.

Finance Lease

A finance Lease effectively allows a company to fund the purchase of vehicles as an asset, even if, strictly speaking the firm never actual owns the fleet of cars or asset. Normally, a finance lease will provide the lessee control over a car for a large proportion of the vehicles useful life, providing them the benefits and risks of ownership.

Finance lease is ideal for VAT registered businesses that want to handle the admin of their vehicles and have the asset shown on there balance sheets.

A Finance lease agreement is a tax efficient option where you can choose to fund the entire cost of the vehicle, Plus interest, over a set period or pay a reduced monthly rental and then a final payment based on the re-sale value of the vehicle (balloon payment).

You do benefit through fixed cost motoring with an option to add a service and maintenance package.

Personal Contract Purchase

Personal Contract Purchase, also known as ‘PCP’ allows the individual rather than a company to lease a vehicle over an agreed term.

As with Hire Purchase you would pay a deposit and set monthly payments, with the difference being the monthly payments are usually lower than a HP agreement giving you a greater level of choice.

This is popular with ex-company car drivers this type of contract as there is no ‘benefit In Kind’ tax to pay and will include service and maintenance for complete piece of mind.

The last monthly payment is usually a lump sum known as a ‘Balloon’ payment, which is the resale value of the vehicle. You will have three options at the end of the contract; Pay the balloon payment and keep the car, hand the car back without penalty (subject to Contract mileage) or swap to another PCP agreement and have another brand new car.

This type of deal would suit drivers in the 10,000 miles per annum bracket

Outright Purchase

Outright Purchase means full, up front payments of a vehicle for your employed drivers or you as a private individual.

Outright purchase can be paid from savings or use alternative methods of raising finances such as a personal loan, however unlike Hire Purchase this kind of funding is not linked to a specific car.

As the owners of the vehicle you will bear the risk of ownership including the maintenance and repair costs, depreciation and resale value.

Hire and Lease Purchase (Purchase Agreement)

For Non VAT registered Businesses or individuals that want eventual ownership of the vehicle.

This type of funding is a straight forward finance agreement where you will own the car once all payments have been made. The VAT can not be claimed unless being used 100% for business use.

The payments will be fixed throughout the term. Unlike Hire purchase, Lease Purchase has a balloon payment which is the value of the vehicle at the end of the term. With these agreements the risks of resale value, repairs and maintenance lies with you.

If the Business is VAT registered and ownership is not essential then Contract Hire would be better value for money.

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"Just a quick thank you, for all the hard work you have carried out on my behalf to secure my new vehicle. Not many people in the motor industry today, would go as far as you to help obtain the right vehicle at the right price.

I will certainly recommend you to all my friends and client's and will definitely be using your services again.

It has been a pleasure to find someone who acts in a totally un-biased professional manner.

Best regards

David"

David Church-Taylor
Expert Motor Vehicle and Road Incident Investigations