Finance Options

Ownership at the end of the agreement
Choice of contract period from 24 to 60 months
Capital cost of the van can be written-down (unless using the Annual Investment Allowance)
Purchase cost may be Corporation Tax deductible through Capital Allowances
Interest elements of monthly payments may be Corporation Tax deductible
Can benefit from higher residual values
Fixed interest rate
Effective budgeting with the final payment facility. Ownership of the vehicle can be acquired once the final payment has been paid in full
Monthly payments are not subject to VAT
The vehicle is registered in the your name, care of the finance company

Outstanding payments appear as a liability on your balance sheet
Not VAT efficient
Vehicle appears on your balance sheet
You are liable for the full value of the vehicle and have no option to return it at the end of the contract
Should the agreement be for an LCV (Light Commercial Vehicle) then the full amount for the VAT on the purchase must be paid upfront

Ownership at the end of the agreement
Choice of contract period from 24 to 60 months
Capital cost of the van can be written-down (unless using the Annual Investment Allowance)
Purchase cost may be Corporation Tax deductible through Capital Allowances
Interest elements of monthly payments may be Corporation Tax deductible
Can benefit from higher residual values
Monthly payments can be lowered further through the introduction of a final payment (balloon payment) at the end of the agreement. This can be set at a value equivalent to a forecasted residual value or reduced in line with anticipated wear and tear on the used value
Fixed interest rate
Effective budgeting with the final payment facility. Ownership of the vehicle can be acquired once the final payment has been paid in full
Monthly payments are not subject to VAT
The vehicle is registered in the your name, care of the finance company

Outstanding payments appear as a liability on your balance sheet
Not VAT efficient
Vehicle appears on your balance sheet
You are liable for the full value of the vehicle and have no option to return it at the end of the contract
Should the agreement be for an LCV (Light Commercial Vehicle) then the full amount for the VAT on the purchase must be paid upfront

Fixed monthly rentals
Choice of contract period from 24 to 60 months
Monthly rentals are up to 100% tax deductible
Potential to carry on using the vehicle at the end of the primary lease period. (Sometime called a peppercorn rental).
Additional line of finance that may not affect your core banking arrangements
No strict mileage or damage penalties (please note that excess mileage and damage to the vehicle will affect its value at the end of your lease)
Monthly rentals can be lowered further through the introduction of a final rental (balloon payment) at the end of the contract. This can be set at a value equivalent to a forecasted residual value or reduced in line with anticipated wear and tear on the used value
Available option to re-finance the balloon payment over a longer period of time
No need to be VAT registered
You retain the majority of the equity built up in the vehicle over the contract
Ability to settle the agreement early

Risk of fluctuations in the used vehicle market which could be a problem if you have opted for a balloon payment and the value of your vehicle is less than this.
Monthly rentals appear as a liability on balance sheet
There are operating risks associated with running the vehicle i.e Maintenance and servicing costs cannot be included
Risk of negative equity if settled too early

Low deposit typically equivalent to 3 monthly rentals
Choice of contract period from 24 to 48 months
Hassle free - option to add servicing and maintenance, taking away all the hassle of running a vehicle
Fixed cost motoring
Steady cash flow
Free up capital - Get a new vehicle without the up-front costs, freeing up money for you to invest elsewhere in your business
No risk - The risk of vehicle depreciation is eliminated. At the end of the contract, the vehicle is simply handed back without worrying about how much it might be worth
Less administration - The finance company deals with all the buying, maintenance and selling issues
Tax benefits - Reclaim up to 100% of the VAT on all maintenance charges, the lease rental the fees and finance element for commercial vehicles
Rentals are up to 100% allowable against corporation tax
Road Fund Licence is provided for the full term of the contract
The vehicle appears off 'Balance Sheet' as it is owned by the leasing company
Maintenance can be included

You will need to estimate the time and mileage for the use of the vehicle
No option to purchase the vehicle
The cost to terminate the contract early can be expensive
If you go over their agreed mileage allowance, excess mileage will be charged for each mile over that is stated in the contract
You must look after the vehicles and return in a well maintained condition, if not you will be charged for any damage over and above as stated in the 'Fair Wear and Tear Guide'