Leasing an individual car for business or leasing a business fleet can be an affordable way to make your business look as professional as you need. Leasing is commonly used by businesses that need to update their fleet frequently and who prefer getting more for their money as they can get a better specification of vehicle for more affordable monthly payments.
Similarly to personal car leasing, business leasing can be arranged with no upfront deposit (on used lease deals) whereas a new lease deal will require usually 3, 6 or 9 up front monthly payments.
We look at the common finance and lease options for you and your business. This includes an overview of the term, the benefits and what your options are at the end of the agreement.
Business Contract Hire
What is a Business Contract Hire?
As a registered business that has been operating for a set period of time (Lease companies have different requirements) you can drive either an individual car or a fleet on BCH. Contract Hire is essentially the business paying a set monthly payment over an agreed period of time for the car but never own it.
What are my options when my Business Contract Hire ends?
1.Hand the vehicle back – If you’re within your agreed mileage allowance and the vehicle is in good condition (Determined by the lease companies’ fair wear and tear standards) then there will be no further charge. You are then free to start a new lease deal
What are the benefits of a Business Contract Hire?
• Optional Maintenance – A package for servicing and MOT’s to make sure you stay within the agreed parameters of maintenance whilst you drive the lease car. • Fixed Monthly Payments – No fluctuating monthly payments to make managing outgoings easier. • VAT Benefits – 50% of your VAT on contract hire payments can be claimed back as well as 100% of maintenance costs you incur. • Time Saver – You don’t need to tax the vehicle or manage the V5 and ownership. • No Depreciation Concerns – Your company drives the business lease vehicle and then hands it back. Value lost in the meantime is at no cost to the company. • Flexible contracts – You can opt for business leases from 12 months up to 60 months, depending on your vehicle requirements.
Business Contract Purchase (BCP)
What is a Business Contract Purchase?
A contract purchase is an agreement whereby the company will be required to make a deposit (Unless you opt for no deposit business leasing) and pay monthly payments. The monthly payments are divided over the period of time and are minus a guaranteed future value of the car. The future value, or balloon payment, is what the finance company deems the minimum value of the car to be worth once the monthly payments have been made.
What are my options when my Business Contract Purchase ends?
1.Return your car/cars – Same as contract hire, there will be no further charges unless the car is over the agreed mileage and there is damage exceeding the fair wear and tear standards.
2.Buy the car – Pay your final balloon/future value figure and you will become the legal owner of the vehicle.
3.Part Exchange – Your current fleet can be used as part exchange towards a newer fleet or individual lease car. If you have a car currently we can take part exchange on this now for a newer lease car.
What are the benefits of a Business Contract Purchase?
Options - More options at the end of the agreement to make it flexible for your business.
Low or No Deposit - Deposits can be from zero up to whatever you would like them to. The higher the deposit the lower the monthly repayments.
Fixed Monthly Payment – Your payments don’t fluctuate and you can plan ahead for outgoing costs.
Lower Payments - An image of a business is important. With leasing and contract purchase, in particular you can get more for your money.
No Depreciation Worries – Depreciation isn’t yours or the companies concern. It is handled by the finance company.
What is a Hire Purchase?
For companies that prefer the option of owning a vehicle from the off without a large sum to pay at the end, a Hire Purchase is a great option. At the end of a Hire Purchase agreement you will have a sum to pay that will usually be a few of your monthly payments.
What are my options when my Hire Purchase ends?
1. Pay Off Your Final Payment – You will be aware of this payment before you sign the agreement. It is simply a transfer of ownership fee so once you make this payment you will be the legal owner of the vehicle.
2. Upgrade - Part Exchange the vehicle for a newer vehicle on a lease or similar finance product.
What are the benefits of a Hire Purchase?
• Assets - You are eventually the owner of the vehicle. • More Affordable to Complete -The final payment is much smaller than that on a Business Contract Purchase agreement. •No Additional Costings - Regardless of your mileage or if you damage the car you wont be given an additional invoice. This will affect the cars value though when you do come to exchange or sell. •Fixed Monthly Cost – Plan your outgoings in advance.
What is a Lease Purchase?
A lease purchase is similar to a Business Contract Purchase. The leasing company provides a final value figure for the vehicle and this is added as a balloon fee at the end of the agreement. The balloon payment isn’t optional however and can be paid through cash, financing the outstanding balance or part exchanging the vehicle to pay off outstanding balloon amount.
What are my options when my Lease Purchase ends?
1. Own the car – One way or another the balloon payment needs to be paid off so technically you own the vehicle. This however, is short lived if you part exchange the car to cover the cost of the balloon payment
2. Part Exchange – you can trade in the car, pay off the balloon figure and lease or buy a new car.
What are the benefits of a Lease Purchase?
Lower Monthly Payments – Typically you will have cheaper monthly commitments on a lease purchase than if you opted for Hire Purchase.
Own The Vehicle – You will have an asset at the end of the agreement which you are free to do as you like.
Flexible Contract - Any length of agreement up to 60 months.•Early Settlement – You can settle your finance early if you have the finances to do so.
We have lots of other questions answered and available to access on our FAQ page. Alternatively, for more information about business lease deals or finance please call us on 01254 919000.
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