Hire Purchase
This simple and traditional type of finance is available to business or private users.
An initial deposit is paid with fixed monthly payments to follow. You own the car when the last payment has been made, which includes a nominal "option to purchase" fee.
Residual or balloon payments may be available which reduce the monthly rental amount but leave a "lump" to be paid at the end.
This method of finance provides the same writing down allowances as cash purchase, and additionally tax relief on the interest element of each payment.
Finance Lease
This is available to business users only. The agreement consists of an initial payment followed by fixed monthly payments. All the payments are subject to VAT.
At the end of the agreement an annual secondary rental will apply to keep the vehicle. When you sell the vehicle you will retain at least 95% of the net sale proceeds.
Your business can obtain tax relief on every payment made if the list price of the new vehicle is under �12000. For higher value cars the relief is limited.
This may be cost efficient for VAT registered businesses buying new cars as payments are based on the VAT exclusive cost of the car. The VAT on the rentals is 50% recoverable for mixed business/private use. 100% is only recoverable if the vehicle is used for wholly business purposes. Remember that even a single mile of home to office travel means that a vehicle does not qualify as "wholly for business use".
I am very happy with the professional and efficient way in which you have always handled our requirements, and have no desire to deal with anyone else.
Peter Dobson - Business Equipment Centre
Focus Leasing, 1 London Road Office Park, London Road, Salisbury. SP1 3HP