Funding Options

BUSINESS CONTRACT HIRE FUNDING OPTIONS

Contract Hire is an ideal product for companies who don't want the financial risk of running their own car and van fleets, and who want to reduce the administrative load of buying, servicing and disposing of their company vehicles.

What are the benefits of contract hire?

1. Fixed monthly costs
Contract hire is a fixed-cost form of motoring. For a set monthly payment, you get the use of a vehicle for an agreed duration and mileage that suits your business. The fee takes into account the vehicle’s price when hired, its forecast mileage during the contract and its estimated residual value at the end. As long as you have not exceeded the mileage and the vehicle is in a fair condition, you just return it at the end of the contract, with no further cost. For an extra monthly fee, Sutton Park Fleet can take care of nearly every hassle associated with car ownership, whether it is maintenance, servicing or replacement vehicles.

2. No risk
Most vehicles will lose value from the moment they leave the showroom. In a contract hire deal, you return it at the end of the contract period, and Sutton Park Fleet take the residual value risk. If you include things like maintenance and servicing, you are also protected from any unseen rise in these costs.

3. Free up capital
Leasing a vehicle instead of purchasing it means you are not tying up capital in a rapidly depreciating asset. You can invest the money that you are not paying upfront in growing your business or reducing debts.

4. Off balance sheet funding
Vehicle leases do not have to be shown on a balance sheet, which will improve a company's liquidity ratio, gearing and return on assets.

5. Purchasing power
While your business may have a fleet of 5, 25, even 100 vehicles, Sutton Park Fleet are used to buying thousands each year. We can negotiate great deals with manufacturers and pass the savings on to you in the form of a very competitive leasing rate.

6. Tax Regulations – Cars

- 100% of the Lease payments for cars up to 130g/km can be offset
- 85% of the Lease payments for cars over 130g/km can be offset
- 100% of the Maintenance element is also allowable

7. Tax Regulations – Vans

- 100% Lease payments on all vans are allowable against taxable profits
- 100% of the Maintenance element is also allowable

8. VAT Implications

- 100% of the VAT element on the rental can be reclaimed on vans
- 50% of the VAT element on the rental can be reclaimed on cars.
- 100% can be reclaimed if the car is solely used for business purposes.
- 100% of the maintenance element can be reclaimed for both Cars & Vans

At Sutton Park Business we have various funding options available to our business customers, as highlighted below.
LEASE PURCHASE

Lease Purchase is a Hire Purchase agreement, offering you the option to own the vehicle at the end of the agreement. It offers fixed repayments and fixed interest payable on the purchase price less the deposit. In addition, you have the ability to defer a proportion of the vehicles cost to a final balloon payment at the end of the agreement. This will result in lower monthly payments than Hire Purchase and could therefore improve your cash flow.

The benefits of Lease Purchase are:
- Simple and quick to put in place
- You retain ownership of the vehicle
- You are not tied to mileage restrictions
- You have fixed repayments and fixed interest to control your costs
- Same tax benefits as Hire Purchase noted above
LEASE HIRE

Lease Hire has many of the benefits of Contract Hire without the perceived inflexibility

A typical Lease Hire customer:

- Has the benefits of ownership without being the real owner
- Can offset the whole rental amount against taxable income
- Have no mileage restriction
- Monthly rentals are fixed but there is flexibility through variable deposit options.

In addition you may wish to offset a proportion of the vehicle cost as a final payment. This is usually referred to as a balloon payment calculated at the outset of your agreement as a percentage of the vehicle price. This could reduce your monthly rentals and have a positive effect on your cashflow. Your balance sheet is likely to show the value of any vehicle on a Renault Lease Hire agreement as a fixed asset and any outstanding rentals as a liability. With low deposits, flexible repayment periods and fixed rental amounts you could control and improve your cashflow.

Tax benefits on Lease Hire are the same as Contract Hire. See above.

At the end of your contract you have three options :

1. You can return the vehicle and well forward your share of the balance of proceeds to you once anything owed to us, including any sell-on expenses, have been settled.

2. Acting as our agent, you can sell the vehicle on our behalf and receive a share of the sale proceeds, assuming no balance is owed to us.

3. If you want to continue to use the vehicles you can pay a nominal fee (from £50 + VAT) and carry on driving for the whole of the following year. There are no mileage restrictions simply drive as much as you want to
HIRE PURCHASE

Hire Purchase is simple and quick to put in place. It appeals to customers of all shapes and sizes from sole traders to large fleets. A Typical Hire Purchase customer:

- Wants to retain ownership of the vehicle
- Is unsure of how long they wish to keep it
- Does not wish to be tied to mileage restrictions
- Does not want to use their capital or overdraft to pay for vehicles

Hire Purchase provides fixed repayments and fixed interest so you can control your costs.
The deposit amount and monthly repayment can be varied to fit your budget. This allows you to use your capital or overdraft facility to invest in your in your business rather than your vehicles. It also opens up an alternative line of credit which may be useful in the future.

Tax Regulations – Cars

- 100% WDA for cars up to 95g/km (Reducing to 75g/km by 2015)
- 18% WDA per annum on a reducing basis for cars up to 130g/km with no cap on the amount that can be written down.
- 8% WDA per annum on a reducing basis for cars over 130g/km with no cap on the amount that can be written down (WDA = Writing Down Allowance)
- Removal of all expensive car rules: No more balancing allowances.
- 100% of the interest is also allowable 100% of the Maintenance element is also allowable

Tax Regulations – Vans

- Annual Investment Allowance (AIA) on the first £200,000 of capital expenditure on plant and machinery up to the end of 2015 ONLY
- 18% WDA per annum on a reducing basis for all other vans. (no maximum)
- 100% of the interest payable is also allowable

VAT Implications

- VAT on purchase price can be reclaimed in full
- VAT on vehicle purchase can only be reclaimed in special circumstances, (Car hire businesses, taxi firms, driving schools and some government agencies), otherwise no VAT can be reclaimed

Funding Options

BUSINESS CONTRACT HIRE FUNDING OPTIONS

LEASE PURCHASE

LEASE HIRE

HIRE PURCHASE