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| Finance Options The information below is offered only as a brief explanation and we do not mean to infer that any particular method is superior to another - always check with your accountant first! This particularly applies to undertaking any finance deal, especially contract hire. Remember that it is a contract and the low repayments are often only achievable from the supplier in return for the customer completing the full contract - consequently ending early is heavily penalised! Cash Purchase: You can of course just buy a van outright either for cash, or provide your own finance. Advantages: Bought and paid for! Disadvantages: Probably not making best use of the vehicle from a tax point of view, or tying up valuable cash flow - check with your accountant. HP Loan: A straightforward loan over any period up to 5 years. Advantages: Very easy to understand. Disadvantages: All VAT has to be paid upfront (which you can then reclaim of course if you are vat registered) plus usually a minimum 10% deposit. May not be making best use from a tax point of view - check with your accountant first. Contract Hire: (We have a sister web site - Cheap Contract Hire) You can contract hire for a set period of time - usually 2 or 3 years and the price will depend on the total mileage you expect to cover. Advantages: Set monthly budget for your vehicles and maintenance can also be included. Can be claimed directly against your tax bill and usually 50% of the vat can also be reclaimed - check with your accountant. Disadvantages: Very rigid contract that is expensive to get out of if circumstances change. Excess mileage charge if mileage limit exceeded. Lease Purchase With Balloon: This is where you can pay a flexible deposit and have a final balloon payment at the end of a 2, 3 or 4 year deal (the van must be sold to a third party and the finance company will keep a percentage of the sale price, but you can of course buy it back if you wish to keep it). Advantages: Flexible deposit and variable balloon which can be set so as to hopefully be a fair bit lower than the expected value of the vehicle which then gives you options to trade-in, sell, etc. Tax and vat advantages - check with your accountant. No mileage limits and easier to get out of as a settlement figure can be offered after a fairly short time. Disadvantages: The vehicle has to be sold on again at the end of the term (or you can pay the balance and continue to lease on a small annual peppercorn rental). The final balloon figure may be more than the van's value if it is in poor condition or has reached an unexpected high mileage - best to try to set a very realistic balloon figure at the start. The above are offered only as a general guideline and we do not mean to infer that any particular method is better than another. It is always advisable to seek independent advice from an accountant before proceeding.  |
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