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| UK Van Source Finance |
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Welcome to the UK Van Source finance section, here you will find the information on the various types of finance that we are able to offer. Please also feel free to use our quick and easy finance calculator to the right hand side. The finance calculator is an aid to working out monthly repayments to fit your budget. You can change the price, deposit, the period of your loan and APR. If you wish to apply for finance on a vehicle then please click here and in most cases we can offer a better rate.
Finance Lease
This may be either a ballon or fully amortised lease. The former has a larger final payment set at the outset, the latter has the total costs plus interest repaid in monthly installments over the term of the lease. Although title remains with the lessor (finance company), the lesse (user) is responsible for selling the vehicle. The disposal proceeds can be funded as a rebate of rentals, thought the lessor will keep a percentage of the sale proceeds or a percentage of the original price. If a balloon is involved then providing this is repaid, typically no additional charge is levied.
As with contract hire, the lessor has been able to reclaim the VAT levied on the purchase price of the new vehicle. This has the effect of making a finance lease rental lower than the equivalent lease purchase repayment. The rental carries VAT. This can be reclaimed by the lessee, although (as with Contract Hire) the reclaim is restricted to 50% if there is any element of private use. The rental is based on time but if a balloon is used then the mileage will be important as this will affect the residual value & in particular the quantum of the final balloon payment.
Contact Hire
With contract hire, in return for a fixed pre-determined stream of rental payments, the finance company supplies the vehicle and takes full responsibility for its depreciation, funding costs and administration. When (as its most cases) a maintenance contract is included, this responsibility is extended to the provision of all servicing and repairs (excluding accident repairs but including tyres, exhausts etc). It typically also covers the road fund licence and, where specified, replacement vehicles as well. The rental calculation is based on time and mileage, and also the cost of maintenance where this is included in the contract.
Since August 1995 the finance company has been able to reclain the VAT levied on the price paid for the new vehicle, and these benefits are reflected in lower monthly. The rentals themselves carry VAT. 100% of this VAT can be reclaimed by the hirer. (assuming he/she is VAT registered).
Contact Purchase
This is a conditional sale agreement, structured as the user contracting to purchase the vehicle over a set period of time. It typically incorporates full maintenance (like Contract Hire). There is usually a final balloon payment (i.e. a single large final payment), after which legal ownership ownership passes to the user. In practice most users do not make the final payment, opting instead to return the vehicle to the finance company. Thereby avoiding the burden of disposal. The repayment figures and the maintenance element are based on time and mileage. Like other purchasing schemes the vehicle is purchased inclusive of VAT and repayments do not carry VAT except for the maintenance element, of which 100% is recoverable.
Lease Purchase
Technically impossible (since lease means rental not purchase) but so called in the vehicle supply industry. Lease purchase is effectively a hire purchase contract that includes a single larger final payment at the end. This is called the balloon payment and reduces the monthly repayment during the life of the contract. Repayments do not carry VAT and the capital cost is written down for tax purposes in the same way as for hire purchase.
Personal Contract Hire
With contract hire, in return for a fixed pre-determined stream of rental payments, the finance company supplies the vehicle and takes full responsibility for its depreciation, funding costs and administration. When (as its most cases) a maintenance contract is included, this responsibility is extended to the provision of all servicing and repairs (excluding accident repairs but including tures, exhaussts etc). It typically also covers the road fund licence and, where specified, replacement vehicles aswell. The rental calculation is based on time and mileage, and also the cost of maintenance where this is included in the contract.
Personal contract purchase
This is a conditional sale agreement, structured as the user contracting to purchase the vehicle over a set period of time. It typically incorporates full maintenance (like contract hire). There is usually a final balloon payment (i.e. a single large final payment) after which legal ownership passes to the user. In practice most users do not make the final payment, opting instead to return the vehicle to the finance company, thereby avoiding the burden of disposal. The repayment figures and the maintenance element are based on time and mileage. Like other purchasing schemes the vehicle is purchased inclusive of VAT.
Hire Purchase
A fixed cost, fixed period loan to support purchase. The user is effectively the owner but title does not pass until the loan is fully repaid. It is on-balance sheet for the user. As they constitute loan repayments monthly payments do not carry VAT. The capital cost can be written down for tax purposes on a reducing balance basis with up to £3,000 capital allowances available against taxable profits per annum. Interest (usually without limit) is also allowed against tax. These allowances may be restricted if there is an element of private use. |
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