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Business Finance Solutions
Contract Hire
Contract Hire is probably one of the most popular finance options used by UK businesses. This option allows the customers to pay fixed monthly rentals without tying up capital. This vehicle funding method includes road fund licence and other warranties and benefits which apply for the duration of the contract (usually between 24 and 60 months).
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Benefits of Contract Hire
• Accurate and fixed monthly budgeting
• Improved cash flow
• Minimum Deposits
• Fixed interest rates
• VAT recoverable on rentals
• No depreciation risks
• No vehicle disposal problems
• Flexible terms in regards to the duration and mileage of the contract
• Optional maintenance and service packages
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Contract Purchase
This form of vehicle finance includes fixed monthly payments over a fixed term, rate and mileage. Contract Purchase may share benefits of the disposal of the vehicle and removes the risk of any shortfall. Vehicles are shown on the company’s balance sheets and capital allowances can be claimed.
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Benefits of Contract Purchase
• Flexible contracts
• Low initial deposit
• Clients may return or claim ownership of the vehicle
• No disposal risk
• Optional maintenance and service packages
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Financial Lease
This funding option is an alternative to Contract Hire where the hirer has the opportunity of paying back the capital cost of the vehicle over a longer period of time. The hirer also has the option to pay a lower rental payment during the contract period and pay a final rental based on the anticipated resale value of the vehicle.
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Benefits of Financial Lease
• Lower initial payments
• Fixed cost motoring
• Fixed interest rates
• VAT recoverable on rentals
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Hire Purchase
With Hire Purchase an initial deposit is paid and the rest of the sum is repaid monthly, usually over a period of one to four years. Ownership will be then passed to the business when all payments have been made. This option also allows the option for a final payment in order to lower monthly costs, available with fixed and variable interest rates.
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Benefits of Hire Purchase
• Vehicle registered in the name of the client
• VAT recoverable on Hire Purchase
• Fixed or variable interest rates
• Interest element of repayments can normally be offset against taxable profit
• The asset appears on your balance sheet
• Monthly payments are not subject to VAT
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Operating Lease
This type of vehicle funding allows the customers to outsource vehicle acquisition and disposal, where Fleet Efficiency will obtain ownership of the vehicle and our clients reserve the right of exclusive use. Other aspects include monthly payments, no liabilities shown on your accounts (off-balance sheet) and flexible lease agreements
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Benefits of Operating Lease
• Provides accurate cash flow
• No risk of ownership
• Frees up capital
• No depreciation risks
• No disposal risk
• Lease payments may be fully tax deductible
• Fixed interest rates
• Optional maintenance and service packages
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Sales and Leaseback
This funding method allows clients who own their fleet to release the capital invested in it. This is done by selling the vehicles at fair market value to Fleet Efficiency and then renting them back. The cash injection can then be invested back into the client’s business. This scheme also takes away any risk on the disposal at the end of the contract and frees up valuable management time.
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Benefits of sales and Leaseback
• Release of capital
• Increases working capital
• Allows re-investment of funds
• Reduction in administration
• Can be offered for all vehicles (new or used)
• Streamline cash flow
• No risk on residual value
• Fixed monthly payments
• Optional maintenance and service
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