Finance
Autowholesale is able to offer a variety of tailor-made financial solutions including:
- Outright Purchase
- Hire Purchase
- Lease Purchase - with and without a final balloon payment
- Contract Hire
One of our advisers will be able to guide you through the benefits of each option. Please contact us for further details.
Outright Purchase
Many companies choose this method, notably in the fields of banking and finance, pharmaceutical and manufacturing. This is a very flexible method where vehicles can be bought and sold as needed without fear of finance agreement penalty charges. There are also tax benefits, as 25% of the capital cost of vehicle purchases can normally be offset against tax up to a maximum of £3,000 per vehicle per annum. Check with your accountant. Vehicles are also on the balance sheet, so are shown as company assets.
Hire Purchase
Hire purchase is often the chosen financing method for companies running fewer than ten vehicles. A specialist finance house normally supplies funding. Repayment profiles are adjustable with typical deposits ranging from 10% to 20%, followed thereafter by monthly payments over usually a 36-month or 48-month period.
There are a number of advantages in using this method, primarily cashflow. Repayments are made in smaller regular instalments, writing down allowances apply, the interest element of repayments is recoverable against tax, and the fixed interest rate means an attractive alternative funding line to the traditional bank overdraft.
Hire purchase is an on-balance-sheet funding method, which means that your vehicles are normally shown on your balance sheet as assets.
Lease Purchase
Lease Purchase is a favoured option for fast growing smaller businesses who want to minimise up-front outlay. This is essentially a purchase scheme very similar to hire purchase but with an inverted payment profile, with a lump sum paid at the end of the vehicle's life as a final 'balloon' payment, rather than an initial deposit paid at the commencement of the agreement. The vehicles are shown on your company balance sheet as assets.
A major advantage of Lease Purchase is to do with cashflow. A small initial deposit and lower monthly costs ease the initial repayment burden, releasing cash to be invested into the business early on, thus it is often an attractive option for businesses who have high start-up costs. Also, there are no VAT payments on lease purchase rentals, and so it is an ideal method for organisations and companies who are not registered for VAT. Full maintenance contracts do attract VAT but only on the maintenance element of the monthly repayment.
Normally there is also an end-of-contract option to purchase. Following the payment of the last monthly rental, the final balloon payment becomes due. When this payment is made, ownership passes to the user.
Contract Hire
Contract Hire is a convenient and trouble-free funding method, especially if you opt for a full maintenance package so that all of your vehicle expenses with the exception of fuel and insurance are taken care of.
Many business users like the fixed and predictable costs which enable them to budget expenses easily over typically a three-year term.
Repayments take into account the vehicle's future residual value, so the user does not have to repay the entire capital cost.
Vehicles are not shown on the users balance sheet, and Autowholesale handles the whole burden of administration and vehicle management.
An Autowholesale speciality is the provision of contract hire for fleets with unpredictable mileage patterns, where mileages can be 'pooled' to give the user maximum flexibility.
Newsletter
