CONTRACT HIRE
This is the type of scheme most favoured by VAT registered businesses who choose not to own their vehicles. The vehicle is effectively taken on a projected mileage related rental contract, usually with maintenance included and for a term of between 2 to 4 years. The vehicle is not owned by the business (i.e it is off Balance Sheet) and has the advantage of fixing the major part of the vehicle's running costs (excluding Insurance and fuel) for budgetary and cash flow purposes over the term of the agreement.
CONTRACT/LEASE PURCHASE
As the name suggests, these and similar schemes are a means to acquiring ownership and as such the vehicle is usually taken on to the balance sheet of a business as a depreciating fixed asset from the moment the contract commences. Payment structures can differ but the low up front payment combined with a final 'balloon' payment at the end of the finance term (2 to 4 years) is popular as it keeps monthly repayments to a minimum.
PERSONAL CONTRACT HIRE
Designed originally for company car drivers opting to take a car allowance in place of their company car, this non-ownership rental scheme (similar to business contract hire but with VAT included and optional fixed maintenance available) is increasingly finding favour with other private car drivers wishing to change their car on a regular basis and at the same time fix their car running costs for the period of the contract - normally 3 to 4 years.
PERSONAL CONTRACT PURCHASE
Now perhaps the most popular method for private individuals to finance the purchase of their new car, this scheme combines flexible initial deposits (can now be offered at £NIL deposit, subject to credit status) with an optional final 'balloon' payment at the end of the term (usually 2 to 4 years), the value of which is guaranteed by the finance company should the owner wish to buy the car or use it as a trade-in for a new one. Subject to condition and payment for any excess mileage travelled over the projections agreed at the commencement iof the contract, the car may be returned at the end of the contract without payment of the final balloon installment.
CONDITIONAL SALE (SIMILAR TO HIRE PURCHASE)
This type of repayment scheme is most suitable for those vehicle owners wishing to obtain ownership and repay the whole of the cost of the vehicle (less initial deposit) over the term of the finance - usually 1 to 4 years.
