Understanding the complexities of leasing agreements can be a taxing experience even for the most niblest of minds. Which options would be the best? Would it be a better move to enter into a straight agreement for rental?
Hire purchase
When you take out a hire purchase agreement, you will be paying a deposit equivalent to 3 months of the overall rental in advance plus VAT. Payment periods can vary, but the usual period is between 36 and 60 months maximum. Your monthly payments will be exempt from VAT and your initial deposit charge can be reclaimed. Another good point is being able to offset the taxable profit – which can be quite a bonus for the small business man. When the lease contract has finished, the van is yours and there are no more charges to pay.
Finance Lease
When you take out a finance lease agreement, you will be paying a deposit of 1 to 3 months of the overall rental in advance plus VAT. Your repayment period is usually between 36 and 60 months, which is the same as the hire purchase agreement. if you are in a position to reclaim your VAT on the deposit, it will only be possible on a quarterly basis. One appealing freature is if the van is sold or part-exchanged at the end of the term – 96% of the van value is retained by the lesse.
Contract Hire
Many aspects of this type of arrangement are the same as the finance lease, with the added bonus of a maintenance package. There is also none of the worries of having to sell the van when the agreement period expires. Sometimes it is known as an Operating Lease. Most of the rules are the same as the other options above, including deposit cost, VAT recoverability etc. So long as you stay within your agreed mileage, you can fix your costs and retain budgetary control of your agreement.
Lease Purchase
Most of the details are the same as the finance lease agreement. Where van leasing differs, is at the end – you sell the vehicle to a third party for a reasonable value and buy it back for £1. 5% of the sale value then has to be sent by the customer to the finance company. You keep the van at the end of the period having written down 100% of the total cost.
Iveco Van Leasing Is just one of serveral other options that are out there to be chosen.
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July 14th, 2010 at 11:32 am
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