Car Leasing Finance Options

Millhouse Leasing is an appointed representative of Network Vehicles and are associate members of the BVRLA (British Vehicle Rental and Leasing Association).

Contract Hire

Fixed monthly costs without financial risk

The running cost of cars and light commercial vehicles is one of the biggest expenses most businesses face. Add to that the risk of depreciation, and it’s no wonder Contract Hire is such an appealing option.

Whether a customer is running a single car or a fleet of 10,000 vans, Contract Hire enables them to control one of their biggest expenses.

Key customer benefits of Contract Hire:

• The vehicle appears off ‘Balance Sheet’ as it is owned by the leasing company
• Tailor-make your own package with bolt-on products and benefits
• No financial risk associated with disposing of the vehicle
• The lease company’s considerable buying power enables us to pass on the savings to our customers through low cost rental as well as highly competitive ancillary products such as maintenance, foreign travel cover and accident management
• From April 2009, customers who rent cars with CO2 emissions below 160gm2 will receive even greater tax benefit
• The convenience of a full maintenance service, at a fixed monthly cost, is optional
• Road Fund Licence is provided for the full term of the contract.
• There is VAT recoverability at 50% for the supply of the vehicle and road tax licence. There is also VAT recoverability at 100% for optional services subject to the customer’s VAT status.

Finance Lease

Pure, tax efficient facility

Finance Lease is a popular funding option for commercial vehicles where Contract Hire is not suitable. (Cars can be financed as well)

Key customer benefits fo Finance Lease:

• Lease Company’s buying power helps the customer benefit from low monthly rentals
• Monthly rentals can be lowered further through the introduction of a balloon rental at the end of the contract. This can be set at a value equivalent to a forecasted residual value or reduced in line with anticipated wear and tear on the used value
• Although the customer does not own the vehicle they receive 98% of the sale proceeds. Where a balloon has been introduced, these proceeds are utilised to help clear the rental
• Available option to re-finance the balloon payment over a longer period of time.

Personal Contract Purchase (PCP)

Cars Only

One of two funding methods for private individuals who may wish to opt out of a company car scheme or would like a car for private use. PCP also gives the customer the benefits of leasing a vehicle along with the option to own it if they so desire.

Personal Contract Purchase enables customers to upgrade to vehicles that might otherwise be unaffordable.

A guaranteed residual value is set by the lease company at the start of the contract, which gives the customer a number of options by the end, some of which are:

• Part-exchange the vehicle and use the equity as a deposit for the next vehicle
• Keep the vehicle by paying the outstanding residual value
• Keep the vehicle and re-finance the outstanding value over a longer period of time
• Hand the vehicle back to the Lease Company and end of the contract

Key customer benefits of Personal Contract Purchase:

• The customer can trade up to an otherwise unaffordable vehicle (e.g. an executive/ sports car)
• Hassle-free and cost-effective way to finance a vehicle
• The convenience of an optional full maintenance service, at a fixed monthly cost, is optional.

Personal Contract Hire (PCH)

Individual vehicle hire contracts

This funding method is basically contract hire for the private individual. It is known by most individuals as “leasing a car”.

The customer, whilst not owning the vehicle, benefits from Lease Company’s buying power to drive down the cost of the monthly rental.

Personal Contract Hire can offer a cheaper alternative to Personal Contract Purchase where the leasing company is benefiting from their purchasing terms with the manufacturer or chosen supplier.

Key customer benefits of Personal Contract Hire:

• Lease company’s buying power drives down monthly rental costs
• Fixed monthly rental that can include additional services, such as maintenance – no cashflow fluctuations
• None of the depreciation risks associated with ownership
• The convenience of a full maintenance service, at a fixed monthly cost, is optional
• Road Fund Licence is provided for the full term of the contract. 

Lease Purchase

Traditional vehicle finance

Lease Purchase, a product very similar to Hire Purchase, is a more conventional funding facility that has been “outshone” in some respects by more recent products such as Contract Purchase or Personal Contract Purchase. Nevertheless, traditional Lease Purchase / Hire Purchase has a number of strong advantages for customers.

Key customer benefits of Lease Purchase:

• Ideal for non-VAT registered companies that require ownership of the vehicle at the end of term
• Effective budgeting with Lease Company’s balloon facility. Ownership of the vehicle can be acquired once the balloon has been paid in full
• Monthly payments are not subject to VAT
• The vehicle is registered in the name of the customer, and where this is a company, the vehicle will appear on the balance sheet and writing-down allowances can be claimed.

Lease Purchase is a dedicated funding product that does not include maintenance or any other value added services. The customer is liable for the full value of the vehicle and has no option to return it at the end of the contract.

Should the agreement be for an LCV (light commercial vehicle), then the full amount for the VAT on the purchase must be paid upfront by the customer. This is a reclaimable payment providing you are a VAT registered business.

Contract Purchase

Eventual ownership

Structurally similar to Contract Hire, Contract Purchase enables customers to make fixed monthly payments. However, with Contract Purchase the customer has the option of retaining the vehicle at the end of the contract.

A guaranteed residual value, which enables lower monthly payments, is set by the Lease Company at the start of the contract, which gives the customer two options by the end:

• Hand the vehicle back to Lease Company
• Keep the vehicle by paying the outstanding residual value and using any equity as a deposit for the next vehicle.

Key customer benefits of Contract Purchase:

• The option to retain the vehicle at the end of the contract - without any depreciation risks
• Choosing vehicles with CO2 emissions below 160gm2 will, from April 2009, result in 20% more in capital allowances than other vehicles, and 10% for those above 160gm2
• Road Fund Licence is provided for the full term of the contract
• The convenience of a full maintenance service, at a fixed monthly cost, is optional.

Contract Purchase is ideal for companies that utilise high value cars and want funding flexibility along with the opportunity to own the vehicle without the residual risk.