This is an ideal funding method for VAT registered companies that wish to handle the administration of their vehicles, and have the asset shown on their balance sheet. This is a VAT benefical finance option where the hirer can choose to pay the entire cost over an agreed lease period, plus an interest charge or pay lower monthly rentals with a final payment based upon an anticipated resale value of the vehicle. However, if the vehicle does not sell for the balloon amount you may risk negative equity when settling the balloon, therefore, be wary of the balloon being too high as you are liable for the disposal and final payment.
Key Benefits
- Low deposit
- No mileage restrictions, although you will end up paying for the depreciation for the miles travelled.
- Offers the VAT advantages of Contract hire.
