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At ContractCars.Com we specialise in Contract Hire, however there are a variety of ways to finance your next new car, to allow you to understand these more fully, we have set the options out below. Please note we do not provide advice or arrange any form of finance other than Contract Hire.
With contract car hire, you hire the vehicle for an agreed period of time (usually between 24 & 48 months) and pay a fixed rental based on the mileage you will do over the contract period. All payments are subject to VAT of which 50% is recoverable. Up to 100% of the monthly rental can be offset against profits.
SINCE AUGUST 1995, LEASING COMPANIES HAVE BEEN ABLE TO RECLAIM THE VAT ON THE PURCHASE OF CARS, THIS MEANS THAT YOU PAY LESS PER MONTH BECAUSE:
Finance lease involves leasing the vehicle for an agreed period of time (usually between 24 & 48 months) and paying a fixed payment until the end of the contract. Usually a lump sum final payment is made which is equivalent to or lower than the expected sales proceeds of vehicle (balloon payment). All payments are subject to VAT of which 50% can be reclaimed. Maintenance cannot be included with finance lease.
Hire purchase involves purchasing the vehicle over an agreed period of time. At the end of the period the vehicle is yours with nothing further to pay. There is no VAT involved with hire purchase.
With lease purchase, you purchase the vehicle over a period of time, deferring an amount of the purchase cost by way of a balloon payment usually equal to or lower than the expected sales proceeds at the end of the contract. This allows for lower monthly payments than with straight hire purchase. There is no VAT involved with a lease purchase agreement on a car.
With personal contract purchase, you lease or purchase the vehicle for an agreed period of time (usually between 24 & 48 months) and you pay a fixed payment based on the mileage you will do over the contract period. At the end of the contract period you can pay an agreed final payment & take ownership of the car or simply send the car back. No VAT involved on finance payments with personal contract purchase, and VAT is applied to maintenance if taken.