Finance Types // Hire Purchase

Over the next few weeks we will be giving you the insight into what finance type will suit you best. We know it is a complicated market out there, and choosing the correct finance or lease type for your new shiny vehicle can be tricky. Here at Crusader Vehicles we will try and break down these difficult questions, and make the order of your new vehicle, an easy one.

First up,

Hire Purchase

The traditional method of owning a vehicle.

The deposit for the vehicle can be any amount, although the minimum of all the VAT on the purchase price must be paid. The larger the deposit, the lower the amount you borrow overall. Repayments on the vehicle can be over a period of 12 months, up to 60 months. All monthly repayments are VAT free as the VAT on the vehicle has already been paid for via the deposit. 100% of this VAT deposit is reclaimable for all VAT registered customers and 100% of the interest charges can be offset against taxable profits. The vehicle itself is an asset on your balance sheet and benefits from writing down allowances and finally at the end of the contract period, the vehicle is 100% owned by you.

Pros:

- Simple method of finance

- Vehicle owned on completion of payments

- Capital allowances available

- If VAT registered, VAT reclaimable at end of 1st quarter

- Low interest rates

Cons:

- On balance sheet as a form of finance

- You are liable for the residual value risk

- Large deposit hindering cash flow

- No final payment, keeping monthly payments high

- Inflexible end of term options