Business Contract Purchase
- A Funding Agreement where title to the vehicle passes
to the customer when all payments and fees have been paid.
- Agreements are constructed with a deferred payment
equating to the anticipated value of the vehicle at the
end of the agreement.
- The vehicle can be returned to the Finance Company at
the end of the contract.
- The contract is set for a period usually between 2 &
4 years.
- The contract is for a set mileage usually a maximum
mileage of 100,000 for petrol engines.
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The customer pays a fixed monthly rental which
will always include:
 a)
Cost of vehicle funding.
b) Cost of
vehicle depreciation.
c) Road Fund
License.
Maintenance
For an optional maintenance rental* the customer can include the
any or all or the following:
a) All Maintenance,
Service, Repairs, Tyres and Batteries.
b) Relief Vehicle
Provision.
c) Recovery
Service.
d) Motor Cub
Membership.
Advantages
1. Low initial
Outlay.
2. Low monthly
cost.
3. No risk
for depreciation.
4. No VAT on
finance repayment.
5. Option to
own vehicle.
6. Vehicle
appears on balance sheet.
7. Fixed cost
motoring.
Disadvantages
1. No or reduced
equity on vehicle.
2. VAT on new
or qualifying vehicles not reclaimable.
3. VAT on Maintenance
element of Repayment.
[ * Note: VAT is not applied to monthly payments but IS due
on any maintenance rental ]
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