|
We at Holben Vehicle Solutions recognise that for those outside of
the Motor Industry finance can be a minefield. You can relax in the
knowledge that we can arrange for a finance package to be tailor
made to suit your budget. Hire Purchase (H.P.) Hire Purchase is the most popular way to purchase a vehicle in the private sector. After paying an initial deposit, you then pay equal monthly payments over anything from a 1 to 5 years period. At the end of the agreement you will gain full ownership of the vehicle. Lease Leasing is a cost effective option, traditionally used by VAT registered businesses. It provides flexible financing for a minimum outlay and still proves to have its tax advantages. VAT can be reclaimed at 100% for vehicles being used solely for businesses purposes or 50% if used for personal use. A final lump sum (residual or balloon) can be added to reduce your monthly repayments and ease cash flow. At the end of the agreement you have 2 options: a) Disposal of the vehicle – you will keep 95% of the sale proceeds and return 5% to the leasing company. b) Alternatively if you do not wish to dispose of the vehicle, you can enter into a peppercorn rental, which allows you to keep the vehicle for an extended period. During the lease term the vehicle is classified as an asset and can therefore be offset against taxable profit. Lease Purchase Lease Purchase is similar to that Hire Purchase – it can be used for private individuals or business users. Lease Purchase is not to be confused with Leasing. It is the ideal method if your company is not VAT registered. A company is able to own a vehicle in a similar manner to that of Hire Purchase, except that the final payment can be structured to include a “balloon†payment, thereby reducing the monthly repayments during the course of the agreement, thus allowing the company a greater cash flow. Tax advantages are the same as that of the Hire Purchase. At the end of the agreement and providing that all payments and any balloon (if any) are paid you have full ownership of the vehicle. Contract Hire Contract Hire is ideal for companies who do not wish to have any risk associated with running their own vehicles. A maintenance agreement can also be included with the monthly repayment to include all servicing and road fund license. All monthly repayments are subject to VAT of which 100% can be reclaimed if used solely for business use or 50% if used for personal use. At the end of the agreement the vehicle is given back and a new agreement taken (if chosen). |
