Outright Purchase

Cashflow

THe full value of the vehicle is financed day one by using available internal cash reserves or via third party finance provisions.

Cost Of Finance

Cost of Finance - If you have internal funds available to purchase vehicles outright and your internal rate of return is lower than finance rates charged by a third party finance company it may prove cost effective to purchase vehicles, however tax and VAT considerations will also need to be taken into account to ensure your acquision method is optimal.

Budgeting

Budgeting is focused on your initial cash outlay to purchase the vehicle, this gives certainty re the capital outlay for your vehicle but requires large amounts of internal finance. As residual value risk is retained by you , this form of financing offers less certainty then contract hire.

Flexibility

Full flexibility re period of ownership - no contractual restrictions re period of time / mileage for which the vehicle can be used.

VAT Recovery

VAT Recovery - If your cars are used for any element of private use however small that may be NO Input VAT will be recoverable on the purchase price. Where the vehicle is used solely for business purposes with no private use whatsoever then up to 100% of the input VAT on the purchase price is recoverable. For vans 100% of the input VAT can be recovered on the purchase price. For all vehicles 100% of the input VAT relating to ancillary services / maintenance charges will be recoverable as this does not vary by acquisition method . The actual VAT recovery position will also be dependant on the VAT status of your organisation.

Residual Value Risk

Residual Value Risk - Risk and reward associated with the value of the vehicle at the end of the contract is retained by you, as a result you are not protected from any adverse movements in the used vehicle market. 

Tax Deductible Expense

Corporation Tax - Capital Allowances claimed by you.

Vehicle Management and Administration

Vehicle Management and Administration - it is typical that the management and administration ( in full or part) associated with this acquisition method is provided by a specialist Fleet management company, allowing you to free up internal resources to focus on core business activities.

Early Termination Costs

Early Termination Costs - These will be equal to the actual costs incurred by disposing of the vehicle prior to its originally anticipated holding period. If the vehicle was acquired via a 3rd party loan some additional costs may be incurred to settle the loan early.

Excess Mileage and Damage Charges

Excess Mileage and damage - These will be equal to the actual costs incurred via an adjustment to sales proceeds. 

Option To Own The Vehicle

Title and ownership is yours from day one