Pure, tax efficient facility
Finance Lease is a very tax efficient financial product. Please contact us directly so that we can illustrate its efficiency against other products. We are always happy to talk directly to your accountant.
Key customer benefits:
- PVS’s buying power helps the customer benefit from low monthly rentals
- Monthly rentals can be lowered further through the introduction of a balloon rental at the end of the contract. This can be set at a value equivalent to a forecasted residual value or reduced in line with anticipated wear and tear on the used value
- Although the customer does not own the vehicle they receive 98% of the sale proceeds. Where a balloon has been introduced, these proceeds are utilised to help clear the rental
- Available option to re-finance the balloon payment over a longer period of time.
As a 'Usership' type contract the customer is entering into a pure funding product. PVS does not support this contract with the residual value or maintenance. However, the funder does allow a balloon which enables both you to budget more effectively.
FAQ’s for Finance Lease
What is Finance Lease?
Finance Lease is a tax efficient option where you choose to pay either the entire cost of the vehicle, including interest charges, over an agreed lease period or opt to pay lower monthly rentals with a final payment based on the anticipated resale value of the vehicle.
Who owns the vehicle?
The vehicle is registered in the Lessor's name (Funder) initially with the exception of USED Vehicle.
As the responsibility of all future Road Fund Licence is with the customer, the vehicle is re-registered to the customer after 9 months.
Change of Process (1st November 2009)
All agreements from 1st November 2009 the vehicle is registered directly to the funder who will provide the RFL for the life of the contract and this will be recharged back to customer after the first year RFL expires, years 2/3/4.
The Customer has entered into a loan agreement and any default of payment may result in repossession and sale of the vehicle.
How does the balloon option work?
This very much depends on the setup of the agreement if you have opted to have a final rental payment or not. If a final rental has been setup this will become due and payable upon expiry of your contract. Should you wish to re-finance the final rental PVS requires a minimum 28 days notice prior to expiry of the contract original term.
Good News: A quotation for a re-finance of the final rental (balloon) can be produce and raised up to 90 days prior to contract expiring this allows sufficient time to notify the customer and get them signed up.
Is Finance Lease subject to VAT?
All rentals are subject to VAT and as such should government legislation change, i.e. VAT rate currently 17.5%, these changes would be passed onto the customer.
Customers are able to claim 50% of the VAT on cars & 100% on commercial vehicles (subject to being VAT registered).
What is the initial outlay?
As the funder is underwriting a business user, the norm in this market place is to accept three rentals in advance.
What Payment Options does my Customer have with Finance Lease?
There are 3 different Payment/Rental Profiles which support this product:
- Terminal pause
Should a customer take a 36 month contract, they will pay 3 rentals in advance, followed by 33 monthly rentals that are then followed 2 months where no rentals are due before the end of the contract.
- Spread rentals
The normal payment profile in today's market as it presents the opportunity to show the customer a lower rental than 'terminal pause' but technically the same length of contracts. Should a customer take a 36 month contract, they will pay 3 rentals in advance followed by 35 monthly rentals and the contract ends on month 36.
- Enhanced deposit
This is used when a customer has a part exchange and wishes to use this vehicle towards a deposit. Should a customer take a 36 month contract, they will pay 1 rental (should be no less than an equivalent 3 rentals) in advance followed by 35 monthly rentals and the contract ends on month 36.
Can I have a Service & Maintenance on this contract?
No this contract does not come with a service and maintenance option, the customer is fully responsible for adhering to the manufacture servicing parameters. Failure to follow these could invalidate the Manufactures warranty on the vehicle.
Does PVS insure the Finance Lease Vehicle?
No. It is the customer's responsibility to insure the vehicle. Please see the Terms & Conditions of the contract.