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Company Car and Vehicle Funding for Businesses

If you’re a company or big business house then obviously you’ll require vehicles for your officers and for various other purposes. But to own or hire such a large fleet will require huge funds. Here are some of the ways you can raise finance for funding your vehicles:

Contract Hire – it is one of the most popular choices with Value Added Tax (VAT) registered companies that want minimum outlay and maximum control of costs. One regular rental payment covers all the risks, including depreciation and disposal for an agreed period of time and mileage. Road fund license is included for the term with maintenance cover being optional.

Contract Purchase – Ideal for non-VAT registered companies and for those with high value vehicles, who would like the option of purchasing the vehicle, but don't want the depreciation risk. The customer acquires the vehicle by paying fixed monthly installments with the asset being shown on the company balance sheet, and can either retain ownership at the end of the contract or hand the vehicle back. Here too, road fund license is included for the term with maintenance being optional.

Finance Lease - Ideal for VAT registered companies who want to handle the administration of their vehicles with the asset shown on their balance sheet. The hirer can choose to pay the entire cost over the agreed lease period, or pay lower monthly rentals with a deferred final payment based on the anticipated resale value of the vehicle.

Lease Purchase – Ideal for both business and private users who wish to acquire ownership once all payments have been made. Part of the capital cost of the vehicle may be deferred into a ‘balloon’ payment at the end of the agreement, which is based on the estimated future value, thus reducing the monthly payment. The balloon payment must be met by either the sale proceeds of the vehicle, or a lump sum payment.

Sale and Leaseback – Perfect for companies who wants to retain the use of their vehicles, yet generate capital from their sale, whilst transferring to a VAT beneficial funding method. Here the vehicles are purchased by the leasing company at an agreed price and leased back using either Contract Hire or Finance Lease.


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