| HIRE PURCHASE
(HP)
You purchase the vehicle over an agreed period of
time. At the end of the period the vehicle is yours with
nothing further to pay. No VAT involved.
KEY BENEFITS
  No
Mileage Restrictions
Allows
you to own the vehicle
PERSONAL
CONTRACT PURCHASE (fPCP)
You lease or purchase the vehicle for an agreed period
of time (usually between 24 & 48 months) and you pay a fixed
payment based on the mileage you will do over the contract
period. At the end of the contract period you can pay an agreed
final payment & take ownership of the car or simply send the
car back. No VAT involved on finance payments. VAT applied
to maintenance if taken.
KEY BENEFITS
Allows
for a private individual to obtain full fleet discount on the purchase of the
car
Allows
for lower deposit and lower monthly payments than hire purchase
Offers
the best of both worlds
You
don't have to decide whether you want to own the vehicle until the end of the
contract
Allows
a private individual to have a fully maintained contract
LEASE PURCHASE
You purchase the vehicle over a period of time, deferring
an amount of the purchase cost by way of a balloon payment
usually equal to or lower than the expected sales proceeds
at the end of the contract. This allows for lower monthly
repayments than with straight hire purchase. No VAT involved
with a lease
purchase agreement on a car.
KEY BENEFITS
Low
Deposit
No
Mileage Restrictions, although you will end up paying for
the depreciation for the miles
travelled
Allows
you to own the vehicle
FINANCE LEASE
You lease the vehicle for an agreed period of time (usually
between 24 & 48 months) and pay a fixed payment until the end
of the contract. Usually a lump sum final payment is set equivalent
or lower than the expected sales proceeds of vehicle (balloon
payment) All payments are subject to VAT of which 50% can be
reclaimed. Maintenance cannot be included.
KEY BENEFITS
Low
Deposit
No
Mileage Restrictions, although you will end up paying for the
depreciation for the miles
travelled
Offers
the VAT advantages of contract hire
CONTRACT
HIRE
You hire the vehicle for an agreed period of time (usually
between 24 & 48 months) and pay a fixed rental based on the
mileage you will do over the contract period. Basically you
pay for the predicted depreciation of the vehicle plus interest.
All payments plus VAT of which 50% is recoverable. Up to 100%
ofthe monthly rental can be offset against profits.
KEY BENEFITS
Low
Deposit
Low
Monthly Payments, particularly on prestige cars due to strong
residual values
Fixed
Costs
Since August 1995, leasing companies have been able to reclaim the VAT on the
purchase of cars, this means that you pay less per month because:
The
interest charges are applied to the net of VAT cost price i.e. a £20,000 car
would be £17,021 without
the VAT, giving substantial savings on interest charges.
The
depreciation on the car is based on the net of VAT cost price, immediately
saving you a significant
amount of depreciation.
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