There are advantages and disadvantages to owning and renting a car and here we look at the methods of achieving both.

Contract Hire

Contract hire is the leasing of a vehicle, normally to a VAT-registered business or company, for a set time and mileage at a fixed monthly rental. The monthly rental is determined by the cost of the vehicle, the period and mileage covered, as well as the resultant depreciation. Maintenance packages are often included within contract hire agreements, but are not obligatory. Under a contract hire agreement the funder retains ownership of the vehicle at all times and therefore continues to absorb the subsequent risks, such as unforeseen running costs and uncertain resale values.

Contract Purchase

Contract purchase offers the facility to purchase vehicles over a predetermined period of time and at fixed monthly costs, without taking the devaluation risks normally associated with ownership. The monthly payment takes into consideration the cost of the car, anticipated depreciation and mileage, as well as any service and maintenance options. At the end of the contract, ownership can be retained by making a final balloon payment. Alternatively the vehicle can be returned for resale by the funder, with no further payments due.

Finance Lease

This is a tax efficient option where you choose to pay either the entire cost of the vehicle, including interest charges, over an agreed lease period or opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle.

Hire Purchase

Hire purchase is a way of owning the car by making monthly repayments. Sometimes you need to pay a deposit up front, sometimes you don't. It depends on the finance company. Either way you make the repayments for an agreed period and after the final payment, the car is legally yours. Until then, it legally belongs to the finance company, although for all practical purposes you act as the owner.

Personal Contract Hire
This is essentially the same as contract hire but for private individuals.

Personal Contract Purchase

This can be used by any individual, whether in business or not. First you select the vehicle that's right for you, and then decide which agreement term to go for - this is either 2 or 5 years. Next, estimate the mileage you expect to cover each year and choose a deposit you are comfortable with, including the anticipated value of any part-exchange.

At the end of the agreement you have 3 options: you can drive away in another brand new vehicle, you can pay the GFV (balloon payment) and keep the vehicle, or you may return it to the finance company with nothing further to pay in accordance with your agreement.

We are a privately owned vehicle finance and vehicle sourcing company and have over 15 years’ experience in the industry. Whether you are a small or large fleet company, or even a private individual, we have the finance package for you. Call us now on 01257 267 036.