Business Contract Purchase

A Funding Agreement where title to the vehicle passes to the customer when all payments and fees have been paid.
Agreements are constructed with a deferred payment equating to the anticipated value of the vehicle at the end of the agreement.
The vehicle can be returned to the Finance Company at the end of the contract.
The contract is set for a period usually between 2 & 4 years.
The contract is for a set mileage usually a maximum mileage of 100,000 for petrol engines.
The customer pays a fixed monthly rental which will always include:

a) Cost of vehicle funding.
b) Cost of vehicle depreciation.
c) Road Fund License.

Maintenance

For an optional maintenance rental* the customer can include the any or all or the following:

a) All Maintenance, Service, Repairs, Tyres and Batteries.
b) Relief Vehicle Provision.
c) Recovery Service.
d) Motor Cub Membership.

Advantages

1. Low initial Outlay.
2. Low monthly cost.
3. No risk for depreciation.
4. No VAT on finance repayment.
5. Option to own vehicle.
6. Vehicle appears on balance sheet.
7. Fixed cost motoring.

Disadvantages

1. No or reduced equity on vehicle.
2. VAT on new or qualifying vehicles not reclaimable.
3. VAT on Maintenance element of Repayment.

[ * Note: VAT is not applied to monthly payments but IS due on any maintenance rental ]