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
funding your vehicles:
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.
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
- 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.
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