There are a myriad of ways one can finance a vehicle purchase, be it one car or a fleet, and professional advice needs to be taken on the best financial route for your company. There are four regular options that can be highly beneficial and we take this opportunity to explain each option.
Leasing is a long-term rental agreement offering the exclusive use of a vehicle for a set period of time at a fixed monthly charge. Leasing helps you avoid any unexpected costs by offering a fixed monthly payment for the term of the lease, meaning you don’t have to worry about depreciation or selling the vehicle as this is taken care of by the leasing company. At the start of a leasing contract, you will pay an initial rental fee – usually equivalent to the sum of three monthly payments – and then make monthly payments for the duration of the contract term.
At the end of the contract, usually 24-48 months, the vehicle can simply be handed back without any further obligations. Driving a new car every two, three or four years is just one of the benefits to leasing.
Not only will you be driving a brand new car every few years but leasing also allows you to drive away with fixed lower monthly payments, lower deposits, inclusive road tax and breakdown recovery, flexible contract duration and mileage terms and all vehicles include standard manufacturers warranty.
CONTRACT HIRE is a finance solution available to sole traders, partnerships and limited companies. It’s a very popular choice for VAT registered companies as they can claim back fifty percent of the VAT on the finance element. Rental costs take into consideration estimated annual mileage, selected models and optional maintenance packages. Once the agreed term has finished you can return your vehicle at no extra cost, provided the vehicle has not exceeded its mileage allowance. This leasing option is an excellent choice for businesses with quick changing or updating fleets, who are looking to minimise their short-term expenditure.
LEASE PURCHASE allows your business to gain eventual ownership of your chosen vehicle. The arrangement consists of a series of monthly repayments, culminating in a ‘balloon’ payment at the end of the contract at which point you can decide to own the vehicle outright or hand the vehicle back. Your business will also benefit from having the time to assess whether they want to take permanent ownership of the vehicle and this can be particularly useful to smaller businesses that want to confirm the reliability and practicality of the vehicle before committing to ownership.
CONTRACT PURCHASE allows you to choose whether or not it is in the best interests of your company to take ownership of the vehicle when the agreement ends. With contract purchase your vehicle has a value guarantee and you are also protected against a future drop in the value of used cars. As such, companies benefit from increased security and flexibility. This makes a contract purchase agreement an excellent option for businesses that are looking to take ownership of a vehicle, without risking its value depreciating, or the financial commitment being too restrictive.
HIRE PURCHASE begins with the payment of a deposit, which is usually between 10 and 50% of the retail value of your chosen model. A term of repayments, usually between 12 and 60 months, is also negotiated. The level of monthly expense that you pay is dependent on three factors: the retail price of the vehicle, the size of the deposit paid and the length of the repayment period. In the short-term, hire purchase can appear an expensive option but in the long run if your company is looking to take ownership of the vehicle, it can work out considerably less expensive in the long term.
One of the central advantages of each of these options is the delivery of a brand new car that will set the tone of your company every time you arrive in a clients car park. What better way to make the statement that your company is at the top of its game than arriving in a beautiful new Mercedes-Benz and at Sandown Mercedes-Benz, we have every model available from the compact and stylish A-Class, the vast capacity of the E-Class estate, the rugged all-wheel drivability of the GLE and the smooth luxurious style of the new S-Class Coupé. Whatever your needs and desires, Sandown Mercedes-Benz offers the most comprehensive range of cars available today.