Choosing the right finance package

Many people wonder what the real difference is between finance types. We have included this basic breakdown to assist you to decide which one may be best for you.
  Outright Purchase Lease Purchase or Hire Purchase Finance Lease* Contract Hire* Contract Purchase Who owns the vehicle? The Customer The Funding Company until the final payment is made The Funding Company until the final payment is made The Funding Company The Funding Company until the final payment is made Who carries the Residual Value risk? The Customer The Customer The Customer The Funding Company The Funding Company Who carries the ongoing Maintenance risk? The Customer The Customer The Customer The Funding Company assuming a maintenance contract is taken The Funding Company assuming a maintenance contract is taken Is the vehicle on or off the balance sheet? On balance sheet On balance sheet On balance sheet Off the balance sheet On balance sheet Typically, how much cash is required up front? 100% of vehicle purchase price Typically 15% of purchase price Typically 6-7% of the purchase price (i.e. 3 months advance rental) Typically 6-7% of the purchase price (i.e. 3 months advance rental) Typically 6-7% of the purchase price (i.e. 3 months advance rental) Who arranges delivery and collection of the vehicle? The Customer The Customer The Customer The Funding Company The Funding Company Does the customer own the vehicle at the end of the contact? Yes Yes No No Yes, if the final lump sum purchase payment is made Can the monthly payments be offset in full against tax? There are no monthly payments. Capital Allowances can be offset against tax but are limited to 25% or the vehicle price or £3000 per annum whichever is the greater The finance element can be offset. Capital allowances are available as per "outright purchase" All of the monthly rentals may be offset against tax. For vehicles costing over £12,000 a proportion is disallowed All of the monthly rentals may be offset against tax. For vehicles costing over £12,000 a proportion is disallowed. In addition 100% of the maintenance payments may be fully offset The finance element is allowable with no rental restriction for cars over £12,000. Capital Allowances are also available Assuming some private use, what % of input VAT can be reclaimed? None None 50% of the VAT on rental payments. 100% of the VAT on maintenance 50% of the VAT on rental payments. 100% of the VAT on maintenance None
*Should you require more in depth information regarding these finance types, click here to view (or right-click and save to download) the information sheets.