Finance Options

We have a panel of lenders that enable us to offer you competitive rates and a swift underwriting decision.

Lenders often use different credit reference agencies and also apply the information to an underwriting scorecard differently - sometimes based upon the payment history of similar existing customers. Consequently we don’t take no for an answer and exhaust all avenues.

Also different lenders sometimes have different products and profiles, for example, some will offer 48 month finance whereas another lender may offer 60 month finance. Consequently we will utilise the best terms for the product and you the customer.

All of our lenders tend to be household names and High Street banks that you will recognise.

At present we do not accept finance applications online due to the confidential nature of the information. However our sales staff will be delighted to take your details over the telephone and get them over to the finance houses either by secure fax or input into a secure online facility.

We offer Contract Hire, Finance Lease, Contract Purchase, Lease Purchase, Personal Contract Hire and Personal Contract Purchase.

Contract Hire

Contract Hire, sometimes referred to as an Operating Lease, is a long term rental agreement. Contracts range from 12 to 60 months and are tailored to the businesses requirements. The Contract Hire Company reclaims the VAT on the original purchase, which reduces your monthly rentals (which are + VAT). Contract Hire is a very popular choice for VAT registered companies as they can claim back 50% of the VAT on the finance element for cars and generally 100% for commercials (subject to no private use, no exempt turnover and not being on the Flat Rate VAT Scheme). On contracts with maintenance the VAT on the service element is 100% recoverable. One of the major benefits is that there are no disposal worries as the future value is underwritten by the leasing company. Another benefit of Contract Hire is that it is generally ‘off balance sheet funding’ (subject to legislation change) which means it can improve your gearing ratio (assets to borrowing ratio) and therefore possibly your borrowing ability in the future.

Advantages

  • Minimum capital expenditure
  • Accurate monthly budgeting
  • Improved cash flow
  • Fixed interest rates
  • Rentals can be offset against the businesses profits. Cars with a CO2 output above 130g/km are currently subject to a 15% disallowance on the amount of the rental that can be claimed against the businesses taxation, for contract-hired cars with a CO2 output of 130g/km or below, there is currently no disallowance
  • No vehicle disposal problems
  • Reduced administration
  • On-going advice and support
  • Road Fund Licence provided (vehicle excise duty paid) for duration of contract
  • Optional maintenance package
  • Optional breakdown rescue cover
  • Optional replacement vehicle cover in event of breakdown
  • Optional GAP insurance which provides cover for the shortfall between the outstanding finance and the insurance value if the vehicle is declared a write-off by your insurance company

Disadvantages

  • Early termination can be expensive
  • If you do more miles than stated in your contract you will be charged excess mileage for each mile over that stated in your contract
  • You must look after the vehicle and return it in a well maintained condition otherwise you will be charged for any damage over and above that stated in the ‘Fair Wear and Tear Guide’
  • You must have fully comprehensive vehicle insurance
  • You will never own the vehicle as there is no option to buy it

Finance Lease

Finance Lease is a method of financing a vehicle that is usually favoured by VAT registered businesses and companies. Your business uses the vehicle while paying a rental rather than a repayment. The monthly rental is determined by the initial cost of the vehicle (excluding VAT), the period of the finance lease and the residual value (the estimated future value of the vehicle at the end of the finance lease period once depreciation is taken into account), plus interest. Although you never take ownership, at the end of the finance lease contract a payment equivalent to the residual value is payable. Usually this means that the vehicle is sold and a proportion of the proceeds of the sale are returned to the lessee.

Most finance lease companies will offer a number of payment options to suit your cash flow. You can lower the monthly rental with a balloon payment at the end of the contract, or you can pay the entire cost in monthly rentals (normally referred to as a fully amortised Finance Lease), in which case you may be able to extend the finance lease with a secondary rental (sometimes called a peppercorn rental).

Advantages

  • Minimum capital expenditure
  • Accurate monthly budgeting
  • A fixed interest rate is available on some contracts
  • No damage recharge as you are responsible for disposal of the vehicle
  • Finance lease is a very popular choice for VAT registered companies as they can claim back 50% of the VAT on the finance element for cars and generally 100% for commercials (subject to no private use). On contracts with maintenance the service element VAT is 100% recoverable
  • Rentals can be offset against the businesses profits. Cars with a CO2 output above 130g/km are currently subject to a 15% disallowance on the amount of the rental that can be claimed against the businesses taxation, for cars with a CO2 output of 130g/km or below, there is currently no disallowance
  • Reduced administration
  • On-going advice and support
  • Optional maintenance package
  • Optional breakdown rescue cover
  • Optional replacement vehicle cover in event of breakdown
  • Optional GAP insurance which provides cover for the shortfall between the outstanding finance and the insurance value if the vehicle is declared a write-off by your insurance company

Disadvantages

  • You will never own the vehicle as the vehicle must be sold to a third party as the end of the agreement
  • Operating risk associated with the vehicle
  • Interest rates can vary on some contract
  • You must have fully comprehensive vehicle insurance

Contract Purchase

Contract Purchase (CP) is a type of finance agreement for business customers looking to fund a new vehicle in a manageable way. The monthly payments are not subject to VAT, however if you do take out the optional service package then you will have to pay VAT on the service costs. CP is ideal for any business that would like options at the end of its finance agreement. CP customers make an initial payment when they first take out the contract, then pay fixed monthly payments and finally have an Optional Final Payment (OFP) at the end at the end of the contract which is also referred to as the GFV (Guaranteed Future Value). You can trade-in your vehicle at a dealership and take another vehicle from them. If the trade-in value is larger than the OFP you will be able to use the difference towards a deposit on a new Vehicle. Or, you can simply return the vehicle to the funder, as long as you have not exceeded the mileage and the vehicle is in an appropriate condition for its age there will be no charge. Finally, you can keep the vehicle either by paying the OFP in full or you will find that most companies offer the opportunity to re-finance the OFP.

Advantages

  • Low initial payment
  • Fixed monthly payments
  • You may be able to refinance the OFP
  • No depreciation concerns if you wish to walk away at the end
  • Maintenance and servicing can be included
  • Fixed OFP when you first take the contract out
  • Cost effective

Disadvantages

  • You will have to make a decision at the end of the contract as to whether you wish to sell the vehicle, return it or keep it
  • You must have fully comprehensive vehicle insurance

Personal Contract Hire

Personal Contract Hire (PCH) is based on a fixed term contract where customers pay an agreed monthly charge for the use of a vehicle for a previously agreed period. It benefits customers wishing to eliminate the financial risk associated with disposing of a vehicle. Contracts are usually taken over two, three or four years, providing a high level of flexibility. Some contracts can be formally extended beyond the end of contract date if required. Just ask and we can answer any of your questions regarding extending your contract. PCH is very similar to business Contract Hire; both are based on a fixed annual mileage agreed on inception of a contract. You will need to decide how many miles you drive each year before quotations can be obtained. Once you have stated how many miles you drive in a year and considered which vehicle you would like to lease a quote can be created for you by one of our sales team.

Regulations with regard to making mileage amendments after contracts are live vary from funder to funder, so it is always better to be as accurate as you can be. If you do exceed the agreed allowance at the end of your contract you will pay an excess mileage charge, which will have been agreed upon prior to signing the finance agreement. Please remember this when deciding upon you annual mileage. If you are looking to have predictable motoring costs adding maintenance to your monthly payment is easy. Maintenance is there to put your mind at rest should any challenges arise with your vehicle and generally covers servicing, routine maintenance, tyres, exhausts and batteries.

Please note that it is responsibility of the person named on the finance agreement to arrange and pay for fully comprehensive insurance for the vehicle. It is important that the vehicle is returned in accordance with the guidelines set out in the ‘Fair Wear and Tear Guide’, a copy of which is made available to customers when they are near the end of their PCH agreement.

Advantages

  • Flexible initial payment
  • Fixed term contract
  • Fixed mileage contract
  • Fixed cost motoring
  • Flexible profiles to suit you
  • You only pay for the use of the vehicle
  • At the end of your contract simply hand the vehicle back
  • Option of including maintenance with the contract
  • No depreciation or disposal risk

Disadvantages

  • Vehicle must be returned in a well maintained condition
  • Early termination can be expensive
  • You must have fully comprehensive vehicle insurance
  • You will never own the vehicle

Personal Contract Purchase

Personal Contract Purchase (PCP) is a type of finance agreement for personal customers looking to fund a new vehicle in a manageable way. The monthly payments are not subject to VAT, however if you do take out the optional service package then you will have to pay VAT on the service costs. PCP is ideal for any individual who would like options at the end of their finance agreement. PCP customers make an initial payment when they first take out the contract, then pay fixed monthly payments and finally have an Optional Final Payment (OFP) at the end at the end of the contract which is also referred to as the GFV (Guaranteed Future Value). You can trade-in your vehicle at a dealership and take another vehicle from them. If the trade-in value is larger than the OFP you will be able to use the difference towards a deposit on a new vehicle. Or, you can simply return the vehicle to the funder, as long as you have not exceeded the mileage and the vehicle is in an appropriate condition for its age there will be no charge. Finally, you can keep the vehicle either by paying the OFP in full or you will find that most companies offer the opportunity to re-finance the OFP.

Advantages

  • Low initial payment
  • Fixed monthly payments
  • You may be able to refinance the OFP
  • No depreciation concerns if you wish to walk away at the end
  • Maintenance and servicing can be included
  • Fixed OFP when you first take out the contract
  • Cost effective

Disadvantages

  • You will have to make a decision at the end of the contract as to whether you wish to sell the vehicle, return it or Keep it
  • You must have fully comprehensive vehicle insurance

Can't decide which is the best finance method for you?

Call First National Vehicles on 0845 22 44 127

or complete our online enquiry form

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