Peugeot Business Finance

• Owning your vehicle (outright purchase or a hire/lease purchase scheme)
• Effectively renting it (contract hire or finance lease)

At Charters, we know many businesses need to consider some form of financing to support their new vehicle purchases. Here’s our quick guide for business finance options:

Contract Hire

Here you agree a contract term (normally 2-4 years), annual mileage and optional maintenance with Charters to determine a monthly rental cost. You avoid having the cost of vehicles on your balance sheet, eliminating any depreciation when it comes to disposing of your vehicles. You can also reclaim 100%of the VAT on commercial vehicles and 50% on cars where there is private use. All VAT on a maintenance contract can be reclaimed. This option allows easy budgeting and can also be tax advantageous.

At the end of the contract, provided the contracted mileage has not been exceeded and the vehicle is undamaged, Charters will take back the vehicle, with no further commitment from you. This means you have an initial low expenditure and fixed monthly costs over a legally agreed period.

Finance Lease

This option involves payment of a fixed monthly payment for the duration of the agreed lease period – after which you can either sell the vehicle or Charters can negotiate this for you. The proceeds are offset against the final payment – with any excess returned as a rental rebate. The final payment (residual value) can be included in the lease to reduce the monthly rental payments.
Payments attract VAT which is 100% recoverable on commercial vehicles and 50% recoverable on cars where there is any private use of the vehicle.

This is a popular choice for VAT-registered companies as the business does not require capital outlay, although it is able to show an asset on its balance sheet. It enables easy monthly budgeting and you can also include a maintenance package – including all routine servicing, mechanical repairs, etc – and reclaim all the VAT paid.

Hire Purchase

This method means you make an initial deposit payment for your vehicle, then pay off the balance via fixed monthly payments over the term of the contract. When all the payments have been made, the vehicle is officially owned by you.

Your monthly payments are calculated on the basis of the retail price of the vehicle, the amount of deposit paid and length of contract. This method involves a low initial outlay, fixed monthly payments, with no VAT on payments. Vehicles appear as an asset on the balance sheet and can be offset against taxable profits under writing down tax allowances.

Lease Purchase

Of relevance to companies not registered for VAT, this option involves a low initial payment, followed by fixed monthly payments – and an option to buy the vehicle at the end of the contract. A “balloon” payment sum may be agreed at the start as the amount you need to pay to obtain ownership after the agreed period (option to purchase price). Alternatively, you can part-exchange so that Charters can sell the vehicle and offset the proceeds against the option to purchase price. Any surplus from the sale would be returned as a cash benefit to you or used as equity towards your next vehicle.

The initial payment is typically three months in advance and you benefit from fixed monthly payments for easy budgeting. There is no VAT on payments and the vehicle shows as an asset on your balance sheet.

An additional maintenance package is offered with this option to cover all routine servicing, mechanical repairs, tyre replacement, exhausts and batteries and a full range of competitive insurance products.