How to Finance
There are many forms of vehicle acquisition for both businesses and private individuals.
Renascence Vehicle Leasing are fully conversant with all aspects of vehicle finance and are able to demonstrate their different products, their benefits and their disadvantages clearly.This is extremely beneficial in making the impact of choosing one finance package over another easily understood and therefore give you the confidence you are making the right decision for yourself and your company.
Please use this section to explore the various finance packages we have to offer as well as how outsourcing the management of your vehicle or fleet can allow the freeing up of valuable company resources to concentrate on your own business.
Business FAQs
Q) What are the benefits of providing company cars?
A) For the employee:
Employees like the hassle-free aspects of having a new car provided and looked after by their employer. The risk of ownership is by way of the financial burden and credit liability with the employer, who arranges appropriate insurance, servicing and repairs and finally disposes of the vehicle. Employers are often flexible in offering a considerable choice of cars. Furthermore the status associated with company cars should not be underestimated.
A)For the employer:
The main benefits to an employer in providing company cars are the ability to maintain an element of control over both the overall cost and the type of vehicle operated. Plus the fact that company cars have traditionally been a very useful tool in both new recruitment and employee retention.
Q) What are the downsides of providing company cars?
A) For the employee:
The major potential disadvantage of a company car for the employee is benefit in kind taxation plus the fact that the employer will re-possess the vehicle upon employment termination leaving the employee without transport.
A) For the employer:
It can be expensive to administer and run a company car scheme,depending on the extent of outsourcing and the funding option used to provide the vehicles. The employer may also be at risk from "bad" drivers - traditionally claims for company car drivers have been greater than for other drivers.
Q) What are the benefits of "free"fuel?
A) For the employee:
Traditionally the provision of "free" fuel was a valuable benefit-in-kind. However with the change in tax structure, this benefit has virtually disappeared, unless the employee is a very high private mileage user. The remaining advantage is that "free" fuel makes the process of claiming fuel for business mileage very simple.
A) For the employer:
If a fuel card is used, it allows accurate fuel consumption reports to be produced. It simplifies the payment of business fuel expenses of employees, reducing administration.
Q) What are the downsides of "free"fuel?
A) For the employee:
High taxes on this benefit mean that employees need to complete much higher private mileage in order to justify receiving the benefit. Furthermore the provision of a fuel card may limit the employee to certain petrol stations only.
A) For the employer:
If private fuel is provided, this may be regarded as an environmentally unfriendly policy - encouraging drivers to complete a certain amount of private miles for the benefit to be tax efficient.
Q) Which employees generally get a company car?
A) There are two criteria that usually determine whether an employee receives a company car - business need and status within the organisation.
The former is determined by annual business mileage, frequency of journeys, the need to carry tools or samples and competitor pressure.
The provision of a status car is a reflection of employment market forces and most closely correlates to salary or status in the company.
Q) What choice and value of car do eligible employees normally receive?
A) The choice of car given to employees follows one of three routes:
1. Specified car for a post or job grade
2. Choice from a list
3. Choice of any car up to a maximum list price or monthly lease value Generally the more senior the employee the greater the degree of freedom of choice and the higher the value of the car.
Q) What proportion of company car drivers are offered fuel for private motoring?
A) Traditionally the provision of private fuel has been a highly valued benefit. In recent years however there have been sharp rises in taxation of private fuel. This has resulted in a marked decrease in the number of employees who take the option of free fuel.
Contract Hire
General Details
This provides a vehicle, with the monthly costs fixed for a specific period with a pre-determined contract mileage.
Your choice of vehicle is purchased by a leasing company using national fleet terms and then hired to you having agreed on contract term annual mileages, maintenance options and monthly rental. On termination of the contract, you simply return the vehicle to us and assuming the contracted mileage has not been exceeded and no accidental damage is evident, you have no further involvement or liability.
Services Included in Contract Hire
- Monthly outgoing with no onerous capital expenditure.
- Fixed monthly rental for accurate budgeting and improved cash flow.
- Minimum initial expenditure, typically three months in advance.
- No capital tied up in a depreciating asset and no residual value risks on your vehicles (depreciation being the largest single cost).
- Routine servicing and maintenance costs can be covered within budget.
- No purchasing or disposal hassles for new cars and VAT qualifying used cars, assuming some personal use. The current Legislation allows you to reclaim 50% of the VAT on your monthly rental against your VAT liability. The other 50% can be offset against taxable profits (rentals allowable against tax, subject to IR rules).
- Costs 'off balance sheet' improving accounting gearing ratios and return on capital employed
The Disadvantages
1) Contract hire is a fixed contract, it is designed to run for a specific period of time and can therefore carry some penalty if terminated early.
Contract Purchase
General Details
Simply a combination of Lease Purchase and the service options of Contract Hire.
This option has been designed specifically for customers who are unable to register for VAT or who are partially VAT exempt and who require a fixed monthly rental with the option to include a maintenance package.
Contract Purchase is popular with companies purchasing executive type cars covering a low mileage.
Renascence Vehicle Leasing purchase the vehicle of your choice, having agreed on the contract term, annual mileage, service options, guaranteed option to purchase price and the monthly rental.
On termination of the contract, you can choose to either return the vehicle with nothing further to pay or to purchase it at the agreed option to purchase price written into the contract
Service Included in Contract Purchase:
- Free sourcing and delivery of your vehicle.
- Road Fund Licence for the duration of the contract.
- Free collection of your vehicle at the end of the contract if you decide not to purchase
Additional Optional Services:
- All routine servicing, mechanical repairs, batteries, exhausts and tyre replacement.
- Replacement vehicle provided in the event of an accident or mechanical breakdown.
- Full membership of a motor organisation including Home Start, Road Side Assistance, Relay, Relay Plus and European Cover.
Your Only Responsibilities:
- Choosing the vehicle.
- Choosing the service options.
- Paying for fuel, oil and insurance.
The Benefits:
- Fixed monthly rental for accurate budgeting and cash flow.
- Minimum initial expenditure, typically three months in advance.
- No capital tied up in a depreciating asset.
- If you don't purchase the vehicle at the end of your contract,any depreciation the vehicle may have suffered is NOT your responsibility.
- Routine servicing and maintenance costs can be covered. 6) No purchasing or disposal hassles, providing constant mobility.
- VAT payable on service options only.
- Flexibility to retain the vehicle at the end of the contract.
- Vehicle shows as a balance sheet asset.
- Capital allowances claimable against tax.
The Disadvantages:
- Not VAT efficient.
- Cannot be shown 'off balance sheet'.
- Not tax efficient in certain circumstances (lower priced vehicles).
- Mileage based contract but with a pre-set Guaranteed Future Residual Value with an Option to Purchase the vehicle at the end of the contract period.
HP/ Lease Purchase
Interest rates for this method of finance have never been as attractive for nearly 50 years.
Hire Purchase (HP) has become the most common method of funding new and used cars during the last half of the 20th century and most people understand the principal. However,whilst it was relatively simple for an individual to calculate that if they were charged a flat interest rate of say 10% per annum, this would cost £10.00 interest for every £100.00borrowed. In an effort to ensure people were not charged high interest charges, the Government in its wisdom decided to enforce rules stating that the APR (Annual Percentage Rate) for all loans must be clearly displayed on all finance offers. (Applicable to loans regulated by the consumer credit act currently under£25k). The result is that even after nearly 20 years of enforcement the average member of the public cannot work out how the APR is calculated.
Basically APR is calculated by taking the interest charges as a percentage of the original amount borrowed and applying factors which take into account the fact that regular sums(normally monthly) will be being paid and effectively reducing the total of the original amount borrowed. A computer is needed to calculate this accurately. But as a "rule of the thumb"the lower the APR the lower the true rate of interest being paid.
Look out for additional charges that will be levied, such as Documentation Fees (Doc Fees) and "Option to Purchase Fees". Whilst nearly all finance houses levy these, the amount can vary significantly. The easy way to check is to look at the "Total Amount to Pay" box, which must be on all regulated agreements.
Watch out for "CPI" Credit Protection Insurances,Early Termination Insurances, GAP Insurances (which pay for shortfalls in debt and insurance pay-outs if the car is accidentally written off). All of which whilst offering an element of protection,the charges can often be horrendously expensive. But becoming ever less popular due to the lack of cover for unknown depreciation risks as available with Contract Hire / Contract Purchase agreements.
Finance Lease
General Details
Finance Lease gives you the advantage of running a fleet without having to purchase the vehicles. At the end of the lease period the vehicle needs to be sold to a third party and you retain up to 99% of the sale proceeds. This refund can be used to fund the deposit of your next vehicle.
There is no large initial capital outlay leaving your capital free for more productive purposes.
Renascence Vehicle Leasing purchases the vehicle of your choice - using our fleet terms, having agreed on the lease term, the monthly rental and a negotiated residual value.
On termination of the contract, the vehicle can be sold, either by you or by ourselves, and the proceeds offset against the residual value written into the lease. Should the proceeds exceed the residual value, you will receive the excess as rebate of rental.
Services included in the Finance Lease
- Free sourcing and delivery of your vehicles.
- Free collection and sale negotiation of your vehicle at the end of your contract.
Additional Optional Services
- GAP insurance
The Benefits
- Renascence Vehicle Leasing fleet purchasing power on all makes of vehicles.
- Costs paid from income not expenditure capital.
- Fixed monthly rentals for the duration of the contract.
- The leasing company is able to reclaim all the VAT on the purchase price of the vehicle which is reflected in much lower monthly rentals to you, the customer.
- Minimum initial expenditure, typically three months in advance.
- No capital tied up in a depreciating asset.
- Rentals allowable against tax, subject to IR rules.
- VAT efficient (50% of the VAT on all rentals can be reclaimed).
- A residual value (balloon payment) can be included in the lease thereby reducing the monthly rentals.
Sale and Leaseback
General Details
This option will release capital tied up in owning your current vehicles. It is most often used to transfer company owned vehicles into a properly managed fleet basis as part of an outsourcing arrangement. Renascence Vehicle Leasing specialise in working closely with clients to carry out this often complex but worthwhile process.
This arrangement also gives you a useful amount of valuable capital which could be used in other more profit making areas of your company, it can give you the opportunity to take advantage of all the latest tax benefits.
Renascence Vehicle Leasing will arrange to purchase your existing fleet of vehicles at a mutually negotiated figure (your written down value or trade price) and then lease them back to you via Contract Hire. Contracts will run over an agreed period of time at monthly rentals with the residual value risk gone. Maintenance packages can be included and tailor- made to meet with your company's specific requirements
The Benefits
- Instant fleet disposal together with operational headaches.
- Capital which is tied up in depreciating assets will be released and put to more profitable use.
- All the benefits applicable to Contract Hire.
- Allows fleet outsourcing arrangements to work efficiently.
Outright Purchase
Available for Business or Private clients.
So often we find clients do not realise that we offer a facility to supply all makes of vehicle on a "cash" or outright buy basis.
In many cases you are not obliged to enter into any form of lease arrangement to benefit from the tremendous discount rates we command.
We do offer straight purchase prices for all cars and vans.
Personal Finance FAQs
Q) What are the pros and cons of alternatives to company cars?
A) There are three main alternatives to providing employees with company cars, each with distinct pros and cons.
1) Optional cash allowance
How much should we pay? Many employers operate a system of company cars or a cash alternative. The employer may have a matrix of cash allowances for different grades of employee.
Any cash allowance will be subject to PAYE and National Insurance and the employer will specify whether the cash allowance is pensionable or non-pensionable.
Employees will normally be able to change from a company car to cash allowance on the same cycle (i.e. three to four years)as they might change the company car.
Depending on the level of the cash allowance, the employer is likely to reimburse mileage at a rate based on the cost of fuel only. Additional tax relief will be available on the difference between the Inland Revenue Authorised Mileage Rate (IRAMRs) and the amount paid.
Generally such allowances tend to favour perk car drivers who may only occasionally require a car for business purposes. As the cash allowance will not be tailored to the employee's business mileage, they are unlikely to be suitable for all high business mileage drivers.
2) Mileage payments
Some employers may require the employee to provide their own car for business purposes and reimburse business mileage only. The most tax efficient way of doing this is to use the Inland Revenue's Authorised Mileage Rates. These rates are calculated to include an allowance for depreciation, insurance,maintenance and fuel costs and may be paid to the employee free of tax and national insurance, provided the employer has an Inland Revenue dispensation.
Some arrangements are mainly used by smaller companies, who do not want to operate a car fleet, and will normally suit employees with a travelling appointment and guaranteed high business mileage.
3) Employer Sponsored Personal Contract Purchase
One of the drawbacks of simple cash allowances is that the employee is offered no assistance in obtaining a company car.This has tended to lead to inertia among employees in taking up a cash allowance. In order to counter this, employers have combined the provision of cash allowances with an introduction to a third party who will provided a PCP option to employees.
For employers, the introduction of a PCP provides a low or no cost option. PCP arrangements offer the employee the benefit of fixed cost motoring and the potential access to bigger corporate buying power to use alongside their cash allowances.For employers, the introduction of a PCP provided is a low or no cost option to enhance the value of a cash allowance.The provision of PCP arrangements may also be extended to employees who would otherwise not be entitled to a company car.
Personal Contracts (PCH)
General Details
This is the most common method of funding a new vehicle in the USA (approx 80%).
However, in the UK in spite of all the vehicle manufacturers offering Personal Schemes the only significant uptake is when a company car driver "opts out" and takes cash in lieu of a car. The British Way in their insistence for ownership remains a mystery in as much that whilst no-one in their right mind would buy a house knowing that in 8 - 10 years time it is worthless, yet they still want to buy their car. Slowly the penny is dropping as more people are looking at leasing.
What Renascence Vehicle Leasing offer
- Free sourcing and delivery of your vehicles.
- Low initial deposit (from 1 month).
- Low fixed monthly payments.
- Fixed contract term and mileage tailored to your requirements.
- Maintenance option available.
- GAP insurance and motor insurance available.
- The chance to own the car outright at the end of the contract.
With the flexibility of Personal Contract Motoring you can decide how much deposit you would like to pay. We then fix an agreed future value which we guarantee. You decide how many months you would like to pay, and the monthly payment is calculated,based upon this information.
Why Personal Contract Motoring is the answer
- You can have any make, new or nearly new car of your choice.
- Contract length and mileage tailored to your requirements. #
- Any deposit allowable - no need for large deposit.
- Low fixed monthly payments that will pleasantly surprise you.
- Maintenance can be included providing fixed cost motoring.
- Then at the end of the contract period you simply choose another new or nearly new car with no trade-in hassle or you can make the final installment and the vehicle is yours to keep.
- If the vehicle is worth more than the predicted value, you keep the difference! Or use as deposit on your next vehicle.
HP/ Lease Purchase
Interest rates for this method of finance have never been as attractive for nearly 50 years.
Hire Purchase (HP) became the most common method of funding new and used cars during the last half of the 20th century and most people understand the principal.
However,whilst it was relatively simple for an individual to calculate that if they were charged a flat interest rate of say 10%per annum, this would cost £10.00 interest for every£100.00 borrowed. In an effort to ensure people were not charged high interest charges, the Government in its wisdom decided to enforce rules stating that the APR (Annual Percentage Rate) for all loans must be clearly displayed on all finance offers. (Applicable to loans regulated by the consumer credit act currently under £25k). The result is that even after nearly 20 years of enforcement the average member of the public cannot work out how the APR is calculated.
Basically APR is calculated by taking the interest charges as a percentage of the original amount borrowed and applying factors which take into account the fact that regular sums(normally monthly) will be being paid and effectively reducing the total of the original amount borrowed. A computer is needed to calculate this accurately. But as a "rule of the thumb"the lower the APR the lower the true rate of interest being paid.
Look out for additional charges that will be levied, such as Documentation Fees (Doc Fees) and "Option to Purchase Fees". Whilst nearly all finance houses levy these, the amount can vary significantly. The easy way to check is to look at the "Total Amount to Pay" box, which must be on all regulated agreements.
Watch out for "CPI" Credit Protection Insurances,Early Termination Insurances, GAP Insurances (which pay for shortfalls in debt and insurance pay-outs if the car is accidentally written off). All of which whilst offering an element of protection,the charges can often be horrendously expensive. But becoming ever less popular due to the lack of cover for unknown depreciation risks as available with Contract Hire / Contract Purchase agreements.
Outright Purchase
Available for Business or Private clients.
So often we find clients do not realise that we offer a facility to supply all makes of vehicle on a "cash" or outright buy basis.
In many cases you are not obliged to enter into any form of lease arrangement to benefit from the tremendous discount rates we command. We do offer straight purchase prices for all cars and vans
