Finding the right solution for your business needs
With increasing competition in almost every business sector, it has never been more important for you to find the right vehicle for your needs and the best method of funding it.
At Cars on Demand we appreciate that cash flow is the heartbeat of most businesses and we have a range of finance solutions, supplied through a broad variety of finance organisations, to match your exact business requirements.
You can choose from:
- Contract Hire
- Lease/Finance Lease
- Lease Purchase
- Personal Contract Purchase / Contract Purchase
- Hire Purchase
Contract Hire
Key features:
- Low initial outlay - usually 3 or 6 months advance rental.
- Fixed monthly rentals for the full contract period based on a set annual mileage, which you determine (Although this can be adjusted by arrangement.)
- Contract periods of 1 to 5 years.
- Road Fund Licence and Assistance (when requested) provided by a recognized motoring organisation.
At the end of the contract, provided the terms of the agreement are fulfilled, the vehicle is simply returned to the supplier.
Additional Benefits
- Fixed budget payments (if maintenance option is selected).
- No disposal worries or depreciation risk
- This form of funding is "off the balance sheet" - Improving your gearing ratio (the return on assets employed within your business).
- Rentals can be offset against taxable profits for maximum tax efficiency*
If you select the maintenance option generally the additional benefits are:
- No unexpected maintenance or repair costs – subject to fair wear and tear
- Full routine servicing including all oils, lubricants and consumables used during the service
- Unlimited tyre, battery and exhaust replacement when required – subject to fair wear and tear
- Replacement vehicle option in event of breakdown and/or accident. free accident management available
Leasing
Key features:
- Low initial outlay - usually 3 or 6 months rental in advance
- Pre-determined fixed monthly rentals, depending on the agreed contract period (usually between 12 and 48 months).
- You simply pay the final rental equal to the anticipated future value of the vehicle at the end of the agreement, if this option is chosen.
Additional Benefits:
- The rentals are allowable against tax reducing your tax liability
- Ability to tailor the final rental to suit your budget
- VAT on rentals in recoverable
Hire Purchase
The traditional method of purchasing a vehicle for business where ownership is priority.
Key Features:
- After paying an initial deposit, the balance is repaid by fixed monthly payments, which do not attract VAT.
Agreements are available for periods between 1 to 4 years and when all the payments have been made, the vehicle belongs to you. The vehicle is classified as an asset, enabling you to offset writing down allowances against taxable profits, along with the interest charges.
Lease Purchase
Combining the traditional ownership benefits of hire purchase with the favourable cash flow advantages of leasing.
Key Features:
- A facility offering ownership without the worries of having to maintain and repair vehicles. (Optional).
- Low initial outlay - usually 3 or 6 months advance payment which does not attract VAT. The contract is mileage based and generally includes Road Fund License. A final payment is set by Redwood to reduce the monthly cost and on completion of the monthly payments you have a choice.
a. Purchase the vehicle at the guaranteed final payment - even if it is worth more than anticipated at the end of the contract.
b. Return the vehicle.
c. Part-exchange the vehicle.
The only charge made if the vehicle is handed back, will be for excess mileage and any misuse or abuse. The vehicle is treated as an asset and appears on your balance sheet and as with lease purchase, writing down allowance, interest charges and any maintenance costs can be offset against taxable profits. - Lower initial outlay compared with cash or hire purchase - reducing the drain on your cash flow. Traditionally 3 or 6 payments in advance.
- You can incorporate a final lump sum payment at the end of the agreement determined by the total mileage you’ll cover - which simply reduces the monthly cost during the contract.
- At the end of the agreement you can make the final lump sum payment and keep the vehicle or part exchange it, using any equity towards the deposit for your next vehicle.
Lease purchase vehicles are treated as an asset and appear on your balance sheet: writing down allowances can be offset against taxable profits along with interest charges in exactly the same way as traditional Hire Purchase.
Personal Contract Purchase (PCP) and Personal Contract Hire (PCH)
Why buy a new car, suffer high depreciation and not know what the maintenance costs are likely to be?
A vehicle supplied by Cars on Demand ensures complete peace of mind and lower monthly costs.
- Low initial deposits - sometimes just 1 month.
- Full Maintenance optionally available - ensuring complete peace of mind and no surprises
- Option to purchase the vehicle at the end of the contract (PCP)
- Ability to hand back the vehicle at the end of the contract with no further cost providing the contract terms are adhered to.
- Ability to have a new car every 2 to 4 years and not worry about depreciation and running costs
VAT
With Finance Lease and Contract Hire, the finance company can recover VAT on the vehicle purchase, which means that the resulting vehicle rentals are reduced (since 1/08/95). You therefore benefit from lower rentals based on the VAT exclusive price.
You can recover VAT on the rentals but if there is any private use of the vehicle then VAT recovery will be restricted to 50% of the rental element although 100% of the VAT on the maintenance element is still reclaimable.
N.B for vans, VAT registered businesses can always claim back 100% of the VAT on lease and contract hire rentals.
These notes are for guidance only, please check with a qualified accountant or tax advisor for any implications to your own business circumstances
E&OE 03/07