BUY
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LEASE
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Are you willing to take the risk on the value of the vehicle in future ? |
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NO |
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2.Lease Purchase
Available on new and used cars to both businesses
and private individuals. This product should not be considered
or confused with 'leasing' despite its name. Lease Purchase
is a purchase method and does not involve leasing or renting.
Lease Purchase is very similar to Hire Purchase
except a 'balloon' payment can be deferred to be paid at the
end of the agreement. Generally agreements are between 2 and
4 years. Normally the interest rate is fixed. This is the
most common method of funding chosen by our customers.
The use of a 'balloon' amount gives the
advantage of significantly reduced monthly payments.
The 'balloon' figure is based on a proportion of the original
purchase price of the car, generally depending on the likely
future value of the car at the end of the agreement whilst
providing some equity at the end of the term.
As there is no minimum amount that the balloon can
be set at, it is also possible to match an exact monthly budget
by utilising a relatively small balloon to achieve the monthly
payment desired.
Example :
| Car costing £43,335 |
Deposit £14000 |
Funding £29335 over
2 years |
| 24 Repayments of £301.58 |
1 Final 'balloon' payment
of £26,197 |
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Whats the Tax situation for businesses?
- The interest can be offset against tax.
- The vehicle is shown as an asset on your balance sheet
- The vehicle can be 'written down' each year by up to 25% to a maximum of £3000 p.a
- There is no VAT element on the repayments
NB. It is possible to arrange variable
rate loans that are based on daily rates of interest (often
called 'balanced payments' plans). Variable rate interest
charges are quoted as a % over base rate.
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