VW Contract Hire VW golf lease

Six types of VW Golf lease finance from Proleasingdeals.co.uk

6 Types of vw contract hire purchase finance for VW Golfs - that's right 6 !!

Below you will find a simple and concise explanation of all the different types of finance available for those looking for a VW Golf lease or VW contract Hire or purchase.

1 Personal Contract Hire

PCH is a Contract Hire Agreement for Private Individuals. It works in exactly the same way as Contract Hire for companies with the exception of VAT. Companies can reclaim this element, whereas with PCH, it is inbuilt into the monthly payment.

Deposits are low, normally equivalent to three monthly payments. The payments are based on the term of the agreement and the expected mileage. Excess mileage will be charged to the user at a few pence per mile. Maintenance packages can be included in these agreements, which include your road fund licence.

At the end of the contract you simply hand the car back and then you can start again with a new car.

Benefits of Personal Contract Hire

• Low initial deposit • Fixed Monthly rentals • Maintenance and road tax can be included • No depreciation to worry about • No disposal issues • Loan car as standard if your car is off the road • Flexible terms

2. Personal Contract Purchase

PCP has been developed and has been increasingly used since the introduction of the new company car tax rules in 2002. Many individuals crippled with the Benefit in Kind tax have opted for this method of funding their cars.

As with Contract Purchase and Contract Hire, the chosen terms of the contract i.e. age, mileage and duration will determine the balloon payment. The balloon payment is the higher final payment required to own the vehicle outright.

At the end of the agreement the purchaser may pay the balloon and take ownership or simply hand the car back to the provider. Charges will be made for excess mileage and any damage, which is considered to be over and above Fair Wear and Tear.

This form of contract is between an individual and a provider and therefore the individual will not be liable to pay Benefit in Kind tax.

Benefits of Personal Contract Purchase • Low initial deposit • No benefit in kind tax • Fixed payments • Maintenance package facility • You can drive the car of your choice • No risk on the residual, subject to mileage and condition • Optional final/balloon payment • Eventual ownership if desired Contract Hire is the leasing of a vehicle for a fixed period of time at a fixed monthly rental.

The choices of vehicle and contract terms are flexible to meet your individual needs and requirements.

Contract Hire enables companies to release cash normally tied up in outright purchase and allows them to opt for a low deposit followed by fixed all-inclusive monthly rental.

The low cost attributed to contract hire is because the financial lender is able to reclaim the VAT on the new car and pass the savings onto the hirer in the form of low monthly rentals

3. Contract Hire

Contract Hire has a market share of 40% and is still rising. The leasing company calculates a residual value for a vehicle at a set age and mileage contract and charges the user a monthly fee to cover the depreciation over that period plus a funding charge along with add-on services such as maintenance and gap insurance.

At the end of the duration of the contract, the vehicle is sent back to the provider with no further obligation to either party, subject to terms and conditions.

Benefits of Contract Hire • Low initial outlay • Flexible rental pattern • Fixed monthly costs which can include maintenance • More capital available for your core business • Off-balance sheet borrowing • No depreciation risk • No disposal problems • VAT on rentals reclaimable if Maintenance included. • No disposal problems • Administration and Management transferred to provider

4. Finance Lease

A finance lease is a VAT-free method of financing a vehicle that is usually accessed by VAT-registered businesses and companies. It is offered to businesses where a moveable asset (the vehicle) is purchased from a supplier – your business can then use this asset while paying an effective rental rather than a repayment.

The monthly rental is determined by the initial cost of the vehicle, the period of the finance lease and the residual value – that is the estimated future value of the vehicle at the end of the finance lease period once depreciation is taken into account. As a residual value is used to calculate your monthly rental, most finance lease companies will insist that you stick to a strict mileage limit as this mileage restriction is used to determine the future value.

You have full use of the vehicle during the finance lease period. Although you never take ownership, at the end of the finance lease contract a payment equivalent to the residual value is payable. Usually this means that the vehicle is sold and a proportion of the proceeds of the sale are returned to the lessee. Alternatively you could choose to pay the entire cost of the vehicle (plus interest) in monthly instalments.

Some finance lease companies may offer you the chance to extend the finance lease with a secondary rental.

Benefits of finance lease? • Low monthly costs and initial outlay • Flexibility of payment options • Latest vehicles • Up to 50% of the VAT payments can be reclaimed • Allows you to feature the vehicle on your balance sheet • Hire rental tax allowances can be applied for • Maintenance packages often included • Proportion of the sale proceeds available at end of lease term

5. Lease Purchase

Lease Purchase is an ideal alternative to bank borrowing for businesses that are not VAT registered and who want eventual ownership of their cars. This is simply a funding scheme that also favours businesses that prefer minimum payments to assist with cash flow. This is because part of the capital cost is deferred until the end of the agreement and has the obvious effect of reducing the monthly payments.

In paying the final balloon payment you complete the agreement and the car is yours to keep. If you trade the car in for another, then any allowance over and above the balloon payment is yours and can be put towards your deposit on your next car. Likewise, if the allowance is less than the balloon, then you are responsible for the shortfall.

Benefits of Lease Purchase • Eventual ownership • Low initial deposit • The car can be written down in your books • All interest paid can be off-set against tax • No VAT on payments • Option to take early settlement • No restriction on mileage

6. Sale and Leaseback

A number of companies have historically preferred to buy their fleet outright. Apart from denying the company valuable funds for business development it is not necessarily tax effective.

It is proven that some rental allowances can outweigh capital allowances claimed against corporation tax on certain vehicles. This is normally the case with the more expensive cars as the government cap the write down allowances available.

Sale and Leaseback is a way of recouping the capital laid out in your fleet and transferring them to a Contract Hire or Contract Lease facility, whereby the provider of the package will purchase the vehicles from the company and Lease them back.

This scheme also takes away any risk on the disposal at the end of the contract and frees up valuable management time.

Benefits of Sale and Leaseback • Release of capital • Reduction in administration • Can be offered for all vehicles, new or used • Maintenance packages available • No risk on residual values • Fixed monthly payments • Streamlines cash flow

Ashley has been providing car leasing and contract hire vehicles for individuals and businesses for over 25 years.

Proleasing provide a transparent service with no hidden extras of administration fees. We believe in supplying the right car, with the right finance with great informative service.

We have a seperate new website showing our vw golf contract hire deals

http://www.proleasingdeals.co.uk

Or you can call a product specialist with 25 years experience on 01491 822 654

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