Car and Van Deals Directleasing-contract-types

Overview of Finance Contracts

• Contract Hire

• Finance Lease

• Hire Purchase

• Lease Purchase

• Contract Purchase

• Personal Contract Hire

Contract Hire Explained

Contract hire is probably the most popular method of acquiring company vehicles in the UK. And for good reason. Under a contract hire agreement, you pay a fixed amount each month over an agreed period – usually 36,48 or 60 monhts. You’ll also agree a total mileage for the contract hire period. 'Forget about large upfront outlays tied up in rapidly depreciating assets. Simply pay an agreed monthly amount.'

Contract hire - the main benefits

Free up capital Forget about large upfront outlays tied up in rapidly depreciating assets. Simply pay an agreed monthly amount. You’re also able to free existing lines of credit for the most profitable areas of your business.

No vehicles on your balance sheet The risk of ownership remains with finance company. Your rental payments are non-capital and the vehicle will stay off the balance sheet.

Reduce risks The used car market is notoriously volatile. Contract hire eliminates the risk of being hit with a loss on vehicle disposal.

Predictable maintenance Choose a full service contract and you remove the risk of unexpected maintenance costs. This has the added advantage of relieving you of the administrative burden of vehicle maintenance authorisation, payment and control.

Save money – save staff time Benefit from a variety of cost savings, without time-consuming administration and paperwork.

Contract hire – other facts to consider

• Large VAT savings – we reclaim VAT on the new vehicle
• Access to manufacturer bonuses and bulk discounts
• Highly competitive finance rates
• Tax disallowance on cars costing over £12000 has been replaced (for vehicle registered on or after 1st April 2009) by a new taxation system based on the vehicles co2 emissions called Leasing Disallowance. 
• 50% restriction on VAT recovery on finance element of rental.
• At the end of the contract you just return the car and have the stress taken away of disposing the vehicle. Nothing could be easier.

 For a contract hire quote on the vehicle of your choice click: Contract Hire Quote

Finance Lease Explained

Finance Lease  You’re looking for the same kinds of benefit as contract hire – but with the opportunity to take on risk and reward when the vehicle is disposed of at the end of the lease period. With finance lease, the ownership of the vehicle is never transferred to you. However, the proceeds of the sale of the vehicle (whether you opt to sell the vehicle or ask the finance company to sell it on your behalf) go to you.

'The savings of Contract Hire but with the opportunity to take on risk and reward when the vehicle is disposed at the end of the lease period.'

Finance lease – the main benefits compared to outright purchase, finance lease has two main advantages.

First of all the finance company recover the VAT on the purchase. This means we buy the car for 20% less than you can buy it for – passing on the savings to you. The VAT on your lease rentals is then subject to a 50% recovery restriction on cars and 100% recovery on light commercical vehicles. And of course, finance lease allows you to access the finance companies purchasing power with leading vehicle manufacturers.

You’ll also benefit from:

    * Low initial payments

    * Fixed monthly depreciation costs

    * Outsourced administration for purchase and disposal

    * Highly competitive finance rates

    * Finance companies purchasing terms

Choose the right finance lease deal

There are two types of finance lease deal:

* Fully amortised - The finance lease rental is calculated by writing the vehicle down to zero over the lease period. You gain all the equity in the vehicle at disposal, but monthly payments are higher.

* Balloon lease - The finance lease rental is calculated to reflect a projected residual value, which is equal to a final balloon payment payable by you at the end of the lease period. This form of finance lease dramatically reduces the monthly lease rental costs.

For a fInance lease quote on the vehicle of your choice click: Finance Lease Quote

Hire Purchase Explained

Hire purchase is a simple, straightforward way to spread the cost of buying a new car. It is fixed rate finance - with a fixed monthly payment. The deposit you pay is flexible - from as little as £99. The remaining balance, plus fixed interest, is repaid in equal instalments over an agreed period (12-60 months).

For a hire purchase quote on the vehicle of your choice click: Hire Purchase Quote

Lease Purchase Explained

Lease Purchase is essentially Hire Purchase with a balloon payment at the end of the contract. Lease Purchase offers lower monthly payments than normal hire purchase. Instead, at the end of the agreement, you can make a final lump sum payment (or 'balloon') to own your car.

It's fixed rate finance - but with a lower fixed monthly outlay since you defer repayment of some of the borrowing. At the end of the agreement options include car purchase, refinance, part exchange or resale.

The deposit you pay is flexible - from as little as £99. The remaining balance, plus fixed interest, is repaid in equal instalments over an agreed period (12-60 months) plus a final balloon payment.

For a lease purchase quote on the vehicle of your choice click: Lease Purchase Quote

Contract Purchase Explained (PCP)

A simple and cost effective way to purchase vehicles. Contract Purchase (PCP) offers fixed monthly payments which allow you to manage your fleet or single car costs effectively, and you can purchase the vehicle at the end of the contract by making a 'balloon' payment.

The benefits, if you or your company is restricted in the amount of VAT it is able to reclaim, contract purchase could be the ideal product for you. As with many other vehicle funding methods you can benefit from the finance companies purchasing power and industry experience to make sure you are running your fleet as effectively as possible. It offers on balance sheet funding while removing the uncertainty of residual value fluctuations.

What is Contract Purchase?

As a conditional sale agreement, contract purchase is an on balance sheet method of funding, where you purchase the vehicle at the end of the contract by making a 'balloon' payment.  Alternatively, the finance company can buy the vehicle back at the 'balloon' value and remove any risk on the residual value.

Contract Purchase includes:

    * Total vehicle management package including funding and optional maintenance

    * CO2 linked capital allowances

    * No VAT attracted to rentals - VAT is only chargeable on the service element of the rental

    * Flexible terms and mileage - minimum 24 months to a maximum of 60 months

    * Fixed payments

    * Low monthly payments due to finance companies purchasing power and residual value

    * Pooled mileage available

    * Option to include a replacement vehicle if vehicle becomes unfit for use through theft, accident, repair or mechanical failure

For a contract purchase quote on the vehicle of your choice click: Contract Purchase Quote

Personal Contract Hire Explained

Personal Contract Hire (PCH) has been specifically designed for people opting out of a company car scheme or joining a new company that provides a company car allowance, instead of a company car. A PCH contract includes road fund licence and, if required, service and maintenance. Rental periods typically vary between 24 and 48 months, there is no large initial payment to be made as deposits are usually equivalent to 1 or 3 months rental. At the end of a contract the vehicle is returned to the lender at the agreed contract mileage with no final or balloon payment to be made.

For a personal contract hire quote on the vehicle of your choice: Personal Contract Hire Quote