Car Leasing FAQs answered by the 1st4 car leasing website

Frequently asked questions on car leasing and contract hire.

On our Car Leasing FAQ page we aim to answer some of the most popular car leasing frequently asked questions.

Car Leasing faq questions and answers

What is Car Leasing?

Car Leasing is a simple solution for vehicle funding. This is in the form of a lease/hire, for cars or commercial vans and is available to all types of businesses and individuals. Sole traders, Partnerships and Ltd Companies use car leasing to obtain vehicles without the financial risk of depreciation. This form of hire therefore allows the release of tied up capital for more helpful use within the company creating a better cash flow.

 

What is the procedure to acquire a vehicle?

Simple step by step vehicle acquisition

5 easy steps

Subject to

Request a quotation

If the quote meets your approval

Complete a proposal form

Application for credit approved

Complete a vehicle order form and return it with your initial payment

On receipt of your official order and deposit we order your vehicle

Complete and return car leasing agreement document

We let you know the vehicle registration as soon as we have confirmation from our supplier so you can arrange your vehicle insurance

We arrange for you to take delivery of your vehicle.

Your vehicle is delivered free of charge to any destination of your choice in the mainland UK

 

Who owns the vehicle?

The finance supplier owns the vehicle during the contract period. We can offer you a purchase price to buy the vehicle from us as a third party after the contract terminates.

 

How much cash is required up front?

Minimum outlay (usually equivalent to three monthly rentals) improves cash flow (Six months may be required for a new-start business).

 

Who bears the cost of depreciation on the vehicle?

The finance supplier owns the vehicle and take the risk. It is their responsibility for any loss relating to the resale value of vehicle.

 

Who insures the vehicle?

The customer / user must insure the vehicle with a fully comprehensive business policy making sure all their specific uses for the vehicle are covered.

 

Who orders the vehicle?

We undertake to source your vehicle from our contacts in the industry at full fleet discount, including any specific promotions/support available at the time. Should you have a local, preferred supplier, we would be happy to order the vehicle from them on your behalf assuming they could comply with our fleet discount.

 

What about vehicle delivery and collection?

We arrange free delivery and collection anywhere in the mainland UK.

 

Is the vehicle cost on or off the company balance sheet?

Car Leasing guarantees that vehicles will be off the balance sheet. This has the following advantages:

Reduces capital outlay

Reduces company investment level, thereby increasing return on investment ratio this will make the company look a stronger performer in the eyes of investors, including, of course, the banks.

 

Can the monthly payments be offset in full against Corporation Tax?

For cars emitting 160g/km or less
lease rental 100% fully allowable
against lessees business
expenses regardless of cost.

 

For cars emitting 161g/km or
more 85% of finance element of
lease allowable against
lessees business expenses regardless of car cost.

Commercial vehicles are not affected by this rule and the rentals are allowable in full irrespective of the cost of the vehicle. In the case of Car Leasing agreements with full maintenance the maintenance costs of the rental for cars and commercials can be offset against tax as a separate item.

 

Are there any VAT advantages to Car Leasing?

Yes! If your business is VAT registered you can also claim back up to 50 percent of the VAT charged on the finance of the vehicle and up to 100 percent the VAT charged on the maintenance applicable when the vehicle is for business and private use. For vans/commercial vehicles used solely for business purposes the hirer may claim 100 percent of the VAT on both the finance and the maintenance.

 

Who pays the ongoing maintenance costs?

If a non-maintenance contract is chosen, the customer is responsible for all routine servicing and maintenance costs under the terms of the agreement. However, the payment for the annual road fund licence is covered for the full contract period. When a full maintenance package is taken all servicing or maintenance costs are inclusive allowing the customer more time to run their business, rather than worrying about the running of vehicles.

 

Can I terminate the car leasing agreement early?

Yes, however, a car leasing agreement is a fixed term agreement intended for a specific time-span and can therefore carry some penalty if terminated prematurely.

 

What options are available at the end of the agreement?

1. Hand the vehicle back and replace it with a new one.

2. Extend the contract for a further six-months, or 12 months, usually at a reduced rate.

3. Ask for a purchase price to buy the vehicle as an individual through us as a third party (The Company cannot purchase the vehicle due to the tax advantages that have already been enjoyed.)

 

Is there anything to pay at the end of the agreement?

Charges are made only if the vehicle has done more miles than originally contracted to do. This is the excess pence per mile charge (ppm), which will be written on the car leasing agreement and will vary from vehicle to vehicle. To avoid this charge we encourage customers to advise us during the vehicle leasing term if they feel that more or fewer miles than originally expected are likely to be done and we will amend the contract accordingly provided there are still 6 monthly payments to go before the contract hire and car leasing agreement is due to terminate .The only other charge would be if the vehicle had been damaged and not repaired.

 

What other types of contracts could I consider?

Business Contract Hire or Personal Contract Hire. If after reading our car leasing faq page you are not sure which type of contract would best suite your needs, please call for a free consultation. We will be only to happy to provide you with more information regarding car leasing FAQ’s and answer any car leasing questions you may have.

Car Leasing FAQ also known as car leasing frequently asked questions. 1st 4 leasing providing answers to car leasing questions and how car leasing works.

Car Leasing faq


1st 4 Car Leasing
Southport, Merseyside, PR9 9BY, United Kingdom.
0344 561 7199 ,
1st 4 Car Leasing specialise in finding cheap car leasing deals. 1st4 is a credit broker not a lender and is authorised and regulated by the Financial Conduct Authority. FCA Firm Reference Number 651746. VAT No 831255058. .