Finance
Hire Purchase
A deposit and vat is required to be paid at the start of the agreement. There are no mileage or return conditions and the vehicle is shown as an asset on your accounts allowing you to claim capital allowances(please seek advise form your accountant). A balloon/residual value can be deferred to the end of the agreement reducing your monthly payments.
Leasing
A deposit is required at the start of the agreement with the VAT payable on each monthly payment. Ownership of the vehicle remains with the funder and it is shown as a cost to your business not an asset. At the end of the lease period you can either returning the goods, extend the lease (Peppercorn rental) or sell the vehicle and retain approximately 95% of the sales proseeds.
Contract Hire
A monthly sum is paid for the use of the vehicle based on term and mileage. This payment can include maintenance, breakdown cover, tyres and road fund licence. The vehicle is returned at the end of the agreement after having been inspected for damage and excess mileage.
Operating Lease
Very similar to contract hire but without the maintenance element, VAT is still paid on the monthly payments and the vehicle is shown as a rental/cost to the company.
