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Finance Options

When deciding how to fund and manage their fleet, more and more smaller businesses are turning to leasing rather than purchasing the vehicles themselves, for reasons include:

  • Vehicle leasing can be a cheaper and easier alternative that doesn’t burden your business with rapidly depreciating assets.
  • It releases capital, improves cashflow and provides you with more confidence when forecasting vehicle expenditure.
  • With the optional maintenance package It releases you from the time-consuming burden of maintenance, repairs, tyres, accident management and vehicle disposal, allowing you to concentrate on your core business.
  • As the UK’s leading fleet funding and fleet management company, we benefit from strong relationships with our suppliers, enabling us to pass savings directly to our customers.

Fleet funding is the leasing or purchase agreement that you put in place to finance your company vehicle arrangements. There are several funding options available:

  • Business Contract Hire
  • Contract Purchase
  • Sale & Leaseback
  • Personal Contract Hire
  • Finance Lease

Each funding option is designed to cater for different, specific fleet needs.

Although a simple concept in principle, Fleet funding can be a minefield if you’re not properly prepared. With so many companies, deals and advice out there in the market, it’s easy to get confused about which option is best for your business. What’s more, recent changes to UK tax law mean that the cost of funding fleet vehicles can vary considerably from one funding method to another.

The type of funding you choose can make a significant difference to your overall costs, risk and flexibility – so it’s crucial to understand everything properly before making your decision.

Factors to consider:

  • Cost
  • Risk
  • Availability of finance
  • Cashflow
  • Tax implications
  • Balance sheet implications

Lex Autolease can help to demystify the Fleet Funding market and help you to understand more about the options available to you, and their impact on your business.

Because we work with such a wide range of businesses, we understand that fleet funding needs vary widely. You may want ways to release capital or reduce your tax liability for example.

Whatever your situation, we can help you to find the right solution - whether you want to keep your vehicles on or off your balance sheet.

On balance sheet vehicle leasing solutions

If vehicles are on your balance sheet, the value of your assets will be increased. These funding methods are ideal for asset-light businesses that want to benefit from the cash advantages of vehicle leasing.

Off balance sheet vehicle leasing solutions

If vehicles are on our balance sheet rather than yours, you'll have less tax liability and won't have to worry about depreciation - perfect for businesses that want to run company vehicles, but don't want to own them.

Choosing the right funding method for your fleet depends upon a number of factors and each situation can be different. As a general rule, it is helpful to consider cars and vans separately. The following are some pointers:

For company cars:

  • Where transfer of Residual Value risk is important:
    • Consider contract hire or contract purchase (depending upon VAT recovery rate). Both provide Residual Value protection, but contract hire allows 50% VAT recovery on finance, and is currently reported off balance sheet
  • Where Residual Value risk is not important:
    • Consider finance lease (assuming on balance sheet treatment is acceptable)

For company vans:

  • Where transfer of Residual Value risk is important:
    • Consider contract purchase as this allows access to accelerated VAT recovery
  • Where transfer of Residual Value risk is not important:
    • Consider finance lease as this means the lessee does not need to worry about end of contract condition, and can often choose to run the vehicle over a secondary lease period for a nominal sum

For more information about our contract hire and vehicle leasing services please phone us on 0800 012 1234 or click below.
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