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CH Contract Hire

Contract Hire quite honestly we seldom quote as it tends to suit more basic vans rather than some of the exotic ones we tend to sell.

A deposit is upfront of say 3- 9 payments

Road Fund Tax is included

You cannot terminate early except with some hefty penalties

At the end of the contract the van is returned to the contract hire company and it must  be in

pristine condition or you will be billed.

It best suits those who can look after vehicles and want large numbers of the sam vehicle.

Its treated as a rental so tax side company tax is treated equally over the hire period.

Myths- The most certainly  is a credit check !

And insurance isn’t included

There is always a mileage restriction in place

Example

Citroen Berlingo L1 Enterprise

3 payments down 35 x £149 a month 10,000 miles per year

End example

Body work damage – £1000

Tyres and brakes worn – £550

Excess mileage at 15 PPM  = 5,000 x .15 = £750

HP Hire Purchase and Lease Purchase

VAT is generally placed  up front though this has been relaxed of late

Its a loan pure and simple, an asset. It can be ended at any time by settling off.

Generally speaking offering through the automotive industry you will get advertised rates but from some banks and supermarkets they still tend to advertise rate that they don’t offer to the general public apart from carefully selected circumstances.

The loan is 100% against tax for that financial year

It can have a balloon at the end to reduce payments

There is no restriction on mileage

In theory if you have a balloon you could have negative equity if you do a lot of miles or damage the van but at least you wont get a bill just a bitter pill !

There is usually an admin fee upfront or spread out over the loan duration

The vehicle is automatically yours after the last payment.

Finance Lease

Place a deposit upfront  in much the same way contract hire

NO VAT is paid upfront apart from the VAT on the advance rentals

eg. if someone says £2000 they mean £2000 + VAT = £2400

There is generally an admin fee too on first payment

There are two types of finance lease

With a balloon

Without a balloon

A balloon is set as a large final payment that is generally set as as a percentage of what the vehicle might be worth at the end.

Many customers initially look for the lowest monthly figure but when the come to change it dont have has much equity as they would like.  The lower the monthly figure the higher the balloon as a general rule. Its worth paying  a little more each month to reduce this balloon

Once the final payment is made the van must be sold to a  third  party unrelated by blood or business in terms of same director. There is nothing wrong with keeping the vehicle its just that ownership cannot be transferred back to the same company

Sone firms such  BNP and Lombard charge a percentage of the sales price at the end so this is something to watch.

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