New Cars for Less, Carefree Motoring With Carefree Contracts purchasing power and because of additional manufacturers bonuses and our ability to reclaim VAT, we can reduce the costs of running New Cars for the business and private customer, making our leasing arrangements increasingly attractive.
Motoring and depreciation costs have soared in recent years which is why more and more motorists have realised the economical sense in leasing as opposed to buying. It all comes down to a single philosophy - why pay more when you can enjoy Carefree Motoring for less. Contract Hire - Finance Lease - PCP - Lease Purchase - HP Contract Hire Contract Hire removes all the financial risk, reduces internal resource required to run your fleet, improves cash flow and provides the benefit of off balance sheet funding. The Leasing company remains the owner of vehicles supplied on contract hire basis and therefore means that the leasing company takes the risks associated with acquistion, disposal and maintenance costs of the vehicle. We will manage the vehicle from "cradle to grave". We will purchase and deliver the required vehicle on agreed term and manage the contract throughout its life. We then collect upon expiry and dispose of. This allows our customer to free up valuable time and concentrate on core activities. Improved Cash Flow - We supply the vehicle for an agreed term at a fixed monthly rental. This makes cash flow budgeting much easier for the customer. Off Balance Sheet Funding - As the leasing company owns the vehicles Contract Hire also means that the vehicles do not appear on the customer`s balance sheet. This can enhance customer's gearing (borrowing) ratio. VAT - The VAT on contract hire rentals is recoverable - subject to Article 7 (2)(A) of the VAT (Input Tax) Order 1992 (as amended). If the vehicle is used for private use the customer can usually reclaim 100% of the VAT on the servicing element and 50% on the finance element of the contract.
Finance Lease
Finance Lease - the most basic form of leasing. It is the cheapest acquisition method with important tax advantages which are passed on to the customer.
Consider this method if low cost of acquisition is the overall priority. Finance Lease vehicles appear on the company balance sheet.
There are two types of Finance Lease generally available. The first is the Residual Value Lease. It provides fixed monthly repayments over the period of the contract followed by a 'Balloon Payment' (final value) equal to the residual value. In this way it offers lower monthly repayments than a normal loan.
The second is the 'Fully Amortised Lease'. This abandons the 'Balloon Payment' with monthly payments accounting for the entire value of the vehicle over the contract period. Under a 'Finance Lease' contract a vehicle`s ownership is retained by the leasing company allowing it to benefit from 25% writing down allowances, however, the vehicle also appears on the customer`s balance sheet. This apparent contradiction is due to the accountancy convention known as SSAP21.
Like 'Lease Purchase' or 'Outright Purchase' many of the risks of running the vehicle stay with the customer. For example, the customer takes the risk that the vehicle may not meet it`s anticipated residual value - although they benefit if the opposite is true.
The customer can claim a tax deduction for the depreciation charge and finance costs charged in the accounts relating to 'Finance Leases', however no relief is given for the rental payments and capital allowances are not available.
In the case of motor cars with a retail price over £12,000 the proportion of the depreciation charge relating to the vehicle is restricted, based upon the same formula that restricts tax relief for 'Contract Hire' payments.
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