Vehicle Leasing For Franchisees

When we calculate your monthly payment; your deposit and Guaranteed Future Value (GFV) are taken into account. GFV is a deferred payment, specific to every vehicle and taking agreed mileage into account. It allows for significantly reduced monthly payments when compare with a traditional Hire Purchase Agreement. This in turn allows you to choose a better vehicle.

At the end of the period of hire you can choose whether to settle the GFV and take full ownership of your vehicle or choose from a range of other options including:

• Use your car for Part Exchange on your next vehicle
• Sell Privately and use the proceeds to settle the GFV
• If the vehicle market at the time means the car is worth less than the GFV, simply hand it back with nothing more to pay (subject to condition and mileage).

If VAT registered the VAT portion of your payment is 100% recoverable if the vehicle is used solely for business use. This figure drops to 50% if the vehicle is also available to the driver for personal use.

The vehicle will be hired for a set period of time, typically between 12 and 60 months and monthly rentals are set based on agreed mileages.

the other main advantage for VAT registered companies is that up to 100% of your rental can be offset against your companies taxable profits.

Other benefits of Contract hire Include:

• There is no risk of a depreciation leaving you with an unexpected cost in the future. With no ownership risk on your part all you need to adhere to is mileage restrictions and wear and tear regulations to ensure your monthly costs are all you will pay.
• The option to have all your maintenance costs included in your monthly rental
• Reduced administration of your vehicles. For example all tax discs are automatically sent to you as required.
• Your payment is purely a rental so sits off your balance sheet avoiding being classed as a depreciating asset

Because HP payments lead to the full cost of the vehicle being settled by the end of your contract, monthly payments will be higher than the same car funded using Personal Contract Purchase (PCP) product. The advantage is that with no deferred balloon payment attracting interest over the term of the loan, the full amount paid and total cost of credit is lower than the cost would have been with a PCP.

Lease purchase offers the lower monthly costs associated with a deferred payment balloon product in the same way as PCP does. It is typically used only when PCP is not available for a particular car or contract requirement. Typically this will be down to the age of the car or your mileage requirements.

Your balloon payment to be settled at the end of the contract is still calculated on the same terms as with PCP, however the final value is not guaranteed. In effect this means that the balloon payment must be settled or refinanced by yourself. This is not typically a cause for concern because, as mentioned, balloons are still calculated taking your mileage and the age or your car at the end of the contract into account. When setting this final amount, there is no benefit to the funder for your car to be worth less than the balloon. If you default on the loan and the car is repossessed, the funder will not want to be unable to recover outstanding costs by selling your vehicle, so it should be about right.

You can choose to rent your van with or without balloon payment due at the completion of the initial lease period, monthly payments will be reduced during the rental if you choose the balloon option.

Once the initial lease period has ended you will have the option to sell the van on behalf of the finance company and pay them a percentage of the profits, or extend the lease, paying only a peppercorn rental.

Note that if you chose the balloon payment option to reduce your rental, this will need to be settled as part of either of these options.