You simply hire a vehicle, for an agreed period at a contracted monthly rate. With contract hire, the vehicle leasing company retains the ownership of the vehicle throughout the contract and at the end of the contract hire period, the vehicle is returned to them.
Contract Hire is the perfect option if a company wishes to reduce the financial risk and admin hassles of running their own fleet. Stephanie White Ltd take care of everything for you, including, buying, servicing and the disposal of the vehicles at the end of the contract hire period.
Benefits: Contract HireFixed monthly payments improve cashflow and ease budgeting burdens. With contract hire, all of the financial risks are met by the vehicle leasing company, leaving you secure in the knowledge that you need only make a fixed payment each month.
Vehicles that are leased under contract hire, are owned by vehicle leasing company, and do not appear on your balance sheet as a capital asset. This improves your company's borrowing ratio.
Administration of the fleet is kept to a minimum, under contract hire,
A contract purchase agreement is basically a contract hire agreement, with an option to make a balloon payment with your final payment, at which point the vehicle title belongs to the client,
With a Vehicle Finance Lease agreement, the vehicle is financed free of VAT. A Finance Lease is usually the choice of a VAT registered business or company, as they benefit most by the VAT free aspect of the lease.
The cost of the vehicle and the proposed annual mileage are used to calculate the monthly rental of the vehicle, under the finance lease.
The vehicle is sold at the end of the finance lease, by the vehicle leasing company, and the proceeds of the sale are returned to the client.
Hire Purchase is a finance loan agreement, under which, you, the client, obtain legal title to the car, van or bike, once all finance repayments have been made. It is also known as a consumer loan.
In some cases, an option to purchase fee may be payable with the final payment of the hire purchase agreement. Where this option is included in the hire purchase agreement, it is usually a nominal fee.
The legal title passes once the final hire purchaser payment has been made, although for tax purposes, the client is regarded as the owner of the vehicle from the outset.
Hire Purchase with balloon payment, is a variation on the basic hire purchase product and is growing in popularity in the UK .
The size of the balloon payment varies according to the individual client, but the larger that you set the balloon payment for the end of the term, the lower your monthly payment will be.
At the end of the term of the hire purchase agreement, you can either pay out the full amount in one hit or refinance the balloon amount and continue paying off the car, van or bike, in monthly installments.
PCP (Personal Contract Purchase)
PCP is an abbreviation for Personal Contract Purchase. PCP is a relatively new way to finance your desired new or nearly new vehicle. The PCP allows you to contract into an agreement over a set period of time, with an agreed maximum mileage.
Benefits: PCP (Personal Contract Purchase)
PCP offers a lower cost and is a more flexible alternative to other finance packages. The PCP also offers much greater flexibility at the end of the term, the driver can choose from these options:
Return The Car
With PCP, when the contract term comes to an end, the driver can advise us and simply return the car with nothing else to pay, subject to it being in a reasonable condition. The advantage of this approach is that there is no need to pay the "Final Optional Payment". Where a vehicle is returned in a condition that is considered by us to be below the anticipated standard for age and mileage at the end of the contract, charges may be applied to bring the vehicle to the required condition.
Keep The Car
PCP allows the driver to own the car outright, by paying the Final Optional Payment.
Summary: Benefits Of Personal Contract Purchase (PCP)
Fixed Monthly payments.
Option to Purchase at the end of contract.
Minimal Deposit necessary 1-3 Monthly payments subject to credit status.
Ability to increase deposit to reduce monthly payments.
Flexible contract terms with & without maintenance.