Finance Options
| Contract Hire | Contract Purchase | Lease Purchase / Hire Purchase | Finance Lease | Outright Purchase |
Who owns the vehicle? | Finance Company | Finance company until LAST PAYMENT | Finance company until LAST PAYMENT | Finance company until LAST PAYMENT | The Customer |
Who carries the residual value risk? | Finance Company | Finance Company | The Customer | The Customer | The Customer |
Who carries the ongoing maintenance risk? | Finance company IF maintenance contract taken | Finance company IF maintenance contract taken | The Customer | The Customer | The Customer |
Is the vehicle on or off the balance sheet? | OFF balance sheet | ON balance sheet | ON balance sheet | ON balance sheet | ON balance sheet |
How much cash is required up-front? | Typically 6-7% of purchase price | Typically 6-7% of purchase price | Typically 15% of purchase price | Typically 15% of purchase price | 100 % of purchase price |
Who arranges delivery / collection? | Finance Company | Finance Company | The Customer | The Customer | The Customer |
Does the customer own the vehicle after the term? | NO | Yes if final payment is made | YES | NO | YES |
Can the monthly payments be offset in full against tax? | All up to £12k. Over £12k a portion disallowed. 100% maintenance offset | No rental restriction over £12k. Capital allowances allowed. | Finance element offset. Capital allowances allowed. | All monthly rentals offset against tax. Over £12k portion only | Yes |
Assuming some private use, What % of VAT can be reclaimed? | 50% of VAT of rentals. 100% VAT on maintenance | None | None | 50% of Vat on rental payments. 100% of VAT on maintenance | Capital allowances can be offset/Tax but up to 25% of £3k P/A Whichever is more |