The decisions you make will affect everything from the amount of risk your business takes on, to the size of your monthly leasing payments – they could also have an impact on your VAT and Corporation Tax bills, as well as your immediate cash flow. To help you decide on the best option for you, here’s a brief overview of some of the funding models available.
Contract Hire is one of the most popular methods of funding for small to medium sized businesses. It’s also one of the simplest. You hire the cars or vans you need for a fixed term, with a fixed mileage allowance, for a fixed monthly rental fee. You agree the term – normally between two and five years – and how many miles you expect the car to cover during this time.
(Your leasing provider will expect you to pay a fixed cost for every mile travelled beyond the agreed allowance, covering them for any additional ‘wear and tear’, and its potential impact on a vehicle’s resale value).
Why contract hire is so popular?
Contract Hire allows you to:
A Finance Lease model also lets your company lease its cars and vans for a fixed monthly fee – but unlike Contract Hire, it also transfers the risk, and potential reward, of ownership to your business.
It comes in two distinct options, and which one you want will depend on your cash flow:
Like Contract Hire, a contract purchase model can furnish your business with cars or vans for fixed monthly payments, for fixed terms, and with fixed mileage allowances. But you also get the option to purchase the vehicle when your agreed term is up. You should consider though, that you can't usually recover any VAT, only on service element or VAT invoiced up-front on commercial vehicle.
Lease Purchase works for businesses, usually non-VAT registered, who want to own their vehicles but don’t want to pay an upfront cost. At the end of the term, you must make a final ‘installment payment’ (a lump sum settlement figure at the end of your contract) on the vehicle to complete the purchase. Maintenance isn’t included with this type of lease as it’s purely a funding product.
The decisions you make will affect everything from the amount of risk your business takes on, to the size of your monthly leasing payments – they could also have an impact on your VAT and Corporation Tax bills, as well as your immediate cash flow. To help you decide on the best option for you, here’s a brief overview of some of the funding models available.
Contract Hire is one of the most popular methods of funding for small to medium sized businesses. It’s also one of the simplest. You hire the cars or vans you need for a fixed term, with a fixed mileage allowance, for a fixed monthly rental fee. You agree the term – normally between two and five years – and how many miles you expect the car to cover during this time.
(Your leasing provider will expect you to pay a fixed cost for every mile travelled beyond the agreed allowance, covering them for any additional ‘wear and tear’, and its potential impact on a vehicle’s resale value).
Why contract hire is so popular?
Contract Hire allows you to:
A Finance Lease model also lets your company lease its cars and vans for a fixed monthly fee – but unlike Contract Hire, it also transfers the risk, and potential reward, of ownership to your business.
It comes in two distinct options, and which one you want will depend on your cash flow:
Like Contract Hire, a contract purchase model can furnish your business with cars or vans for fixed monthly payments, for fixed terms, and with fixed mileage allowances. But you also get the option to purchase the vehicle when your agreed term is up. You should consider though, that you can't usually recover any VAT, only on service element or VAT invoiced up-front on commercial vehicle.
Lease Purchase works for businesses, usually non-VAT registered, who want to own their vehicles but don’t want to pay an upfront cost. At the end of the term, you must make a final ‘installment payment’ (a lump sum settlement figure at the end of your contract) on the vehicle to complete the purchase. Maintenance isn’t included with this type of lease as it’s purely a funding product.
Download the table for more in-depth comparison of the business models mentioned above showing the different funding methods available. From the up front costs to who owns the vehicle when the lease is up, you’ll be able to compare the options and work out which is best for your business.
Download the table for more in-depth comparison of the business models mentioned above showing the different funding methods available. From the up front costs to who owns the vehicle when the lease is up, you’ll be able to compare the options and work out which is best for your business.
There’s no reason why vehicle finance should be complicated for individuals. If you’d like to learn more, we have explained the most common finance products below.
This is probably the most popular leasing product for individuals looking for a regular payment and the chance to drive a new car every two to five years. Personal Contract Hire provides fixed monthly costs for the finance of the vehicle with the option to include extras such as servicing, maintenance and breakdown cover for even greater control of your budget.
With Personal Contract Hire, the leasing company takes on the risk of how much the vehicle will be worth at the end of the contract – meaning no unexpected surprises for you. At the end of the agreement the vehicle is handed back and an order for a brand new car can be placed. You do not have the option to buy the car at the end of the term.
This gives you many features similar to Personal Contract Hire, such as fixed monthly payments, but provides you with the option of owning the car at the end of the contract.
The expected value of the vehicle at the end of the contract is set based on how long you want to use it and your mileage over the period. This value is the amount you’ll have to pay at the end of the contract to take ownership. If you choose not to take ownership, the vehicle is handed back and another vehicle can be ordered.
There’s no reason why vehicle finance should be complicated for individuals. If you’d like to learn more, we have explained the most common finance products below.
This is probably the most popular leasing product for individuals looking for a regular payment and the chance to drive a new car every two to five years. Personal Contract Hire provides fixed monthly costs for the finance of the vehicle with the option to include extras such as servicing, maintenance and breakdown cover for even greater control of your budget.
With Personal Contract Hire, the leasing company takes on the risk of how much the vehicle will be worth at the end of the contract – meaning no unexpected surprises for you. At the end of the agreement the vehicle is handed back and an order for a brand new car can be placed. You do not have the option to buy the car at the end of the term.
This gives you many features similar to Personal Contract Hire, such as fixed monthly payments, but provides you with the option of owning the car at the end of the contract.
The expected value of the vehicle at the end of the contract is set based on how long you want to use it and your mileage over the period. This value is the amount you’ll have to pay at the end of the contract to take ownership. If you choose not to take ownership, the vehicle is handed back and another vehicle can be ordered.
Click on any of the below links to discover more ...
About Corporate Leasing Solutions for businesses with over 100 vehicles in their Fleet
About Leasing Options for SMEs for businesses with less than 100 vehicles or individuals
About LeasePlan services sold via our Finance Brokers
About Personal Leasing Options for individuals seeking to lease a car
Click on any of the below links to discover more ...
About Corporate Leasing Solutions for businesses with over 100 vehicles in their Fleet
About Leasing Options for SMEs for businesses with less than 100 vehicles or individuals
About LeasePlan services sold via our Finance Brokers
About Personal Leasing Options for individuals seeking to lease a car
Leasing a car means that essentially you rent a vehicle for an agreed amount of time and for an agreed fixed fee.
There are many options to choose from, depending on your own circumstances, and whether you’re leasing for yourself or as part of a business – both of which carry their own benefits.
When it comes to sourcing vehicles for a growing business, leasing can offer a whole lot more than purchasing outright.
Leasing a car means that essentially you rent a vehicle for an agreed amount of time and for an agreed fixed fee.
There are many options to choose from, depending on your own circumstances, and whether you’re leasing for yourself or as part of a business – both of which carry their own benefits.
When it comes to sourcing vehicles for a growing business, leasing can offer a whole lot more than purchasing outright.
View the Fair wear and tear guide for cars
View the Fair wear and tear guide for vans
For more information on leasing a vehicle, watch our video below for five reasons why business vehicle leasing makes so much more sense.
View the Fair wear and tear guide for cars
View the Fair wear and tear guide for vans
For more information on leasing a vehicle, watch our video below for five reasons why business vehicle leasing makes so much more sense.