Personal Contract Purchase (PCP)
The Personal Contract Purchase concept has been developed
to enable individuals to finance their own vehicles whilst
still
retaining some of the benefits associated with a company
car. A lease for a new or used vehicle is offered for
a pre-determined period. This period is normally 24 to
48 months, although
longer periods can be arranged. This type of contract
also has a pre-set mileage. At the end of the contract
period
the driver may purchase the vehicle by paying the Minimum
Future Value (sometimes called a balloon payment) or
simply return it to the contract provider. It should be
noted that
if you exceed the pre-set mileage agreed, a pre-determined
excess mileage charge will be levied.
As this type of
contract is written in the individual's name, it currently
attracts no 'benefit in kind' taxation.
- This facility
can also be offered to those employees not normally entitled
to a company car.
- Low initial outlay
- Any make or model of vehicle, new or
used
- No benefit in kind liability
Personal Contract Hire
(PCH)
A contract for a new or used vehicle is offered
for a pre determined period, normally 24 to 48 months,
although
longer contract
periods can be offered. This type of contract also
has a pre-set mileage and should this mileage be
exceeded by the end of the
contract a pre determined charge is levied.
Where
applicable, the VAT is claimed back on the purchase of the
car by the leasing company and non-reclaimable
VAT is charged
on the monthly rental. There is no 'guaranteed
future value', and at the end of the contract, the car would
normally be returned
and excess mileage charges made to you if appropriate
as per the contract. You are able to purchase the
car at the end of
the contract if you wish and a price will be quoted
at that time.
Lease Purchase
Lease Purchase, this method of motor finance is
best suited for the finance of prestige vehicles,
where
there is potentially
a significant benefit in taking on the responsibility
of the residual value. |
