Finance Products - learn more.
Finance Products Explained
LM Vehicle Leasing offer Business Contract Hire and Personal Contract Hire as two methods to lease your next vehicle.
We understand that choosing between the two options can sometimes be confusing. That's why we want to help you to understand options available to you so that you can make an informed decision.
The products that we have available are from a limited range offered through our panel of lenders. You may find that some finance options may not be applicable in your particular circumstances. You should also understand that alternative sources of finance may be available to you, such as through banks or internet aggregators.
Additional information can be obtained from organisations such as the Finance and Leasing Association www.FLA.org.uk or the Money Advice Service www.moneyadviceservice.org.uk
Personal and Business Contract Hire
Personal Contract Hire (PCH) or Business Contract Hire (BCH) allows the customer (the lessee) to choose the vehicle they want, use it for a set period of time and then give it back to the leasing company (the lessor) at the end of the period of hire.
The customer will pay a fixed monthly rental payment for a fixed period of time which is based on a fixed annual agreed mileage.
Some PCH and BCH agreements include Annual Vehicle Excise Duty (road tax). In addition to this, service and maintenance plans can also be added.
The customer is not responsible for the disposal or sale price of the vehicle at the end of the contract. The car is owned by the finance company, the customer has no option to buy it, and cannot sell it. All rentals will attract VAT at the current rate. PCH deals are quoted inclusive of VAT whereas BCH deals are quoted exclusive of VAT.
Summary
Initial Rental
Advance Rentals are usually paid at the start of the agreement, these are normally agreed by the lessor and lessee, but 1, 3, 6, 9 or 12 advance rentals are most common. The more that is paid at the start of the agreement, the lower the monthly payments for the remaining term.
Fees
The Lessor may charge additional fees, such as arrangement fees. If you are VAT registered, the VAT on the rentals can be wholly or partially reclaimed by the lessee. Your Accountant will be able to advise you on this.
Restrictions
You will pay for any excess mileage charges if you have exceeded your agreed mileage and/or if the vehicle is not maintained and kept in good
condition. This includes servicing the vehicle at the correct intervals. The vehicle must be fully insured as well as kept in a good roadworthy condition.
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Ending the Agreement
Once your agreed contract term has run out you can extend the lease on the car or you can choose to hand the car back, subject to restrictions. If you settle early there maybe penalties for doing so.
Advantages of Personal or Business Contract Hire
· Often the lowest upfront and monthly cost for a brand new car.
· Full manufacturer’s warranty (please note this may expire before the end of the contract).
· Road tax, breakdown cover, and servicing often included (servicing is subject to taking out a maintenance plan at an additional cost)
· You pay monthly rentals and then hand your car back to the finance company at the end of the contract.
· If you've got your own business and are VAT registered, you maybe claim an element of the VAT back. Best to check with your Accountant.
Disadvantages of Personal or Business Contract Hire
· You won't own the car – you are just the driver for the term of the agreement.
· Limited mileage. Excess mileage charges range from 3p to 50p per mile.
· You will be charged if there is damage to the car.
· If the car is written off, and the insurer's value is less than that of the leasing company, you may be liable for the difference
LM Vehicle Leasing is a trading style of LM Motor Company Limited which is a credit broker and not a lender. We can introduce you to a limited number of lenders and the finance products that they offer. Note that we are not an Independent Financial Advisor (IFA); we will provide details of products available, but no advice or recommendation will be made. You, the Customer, must decide whether the finance product is right for you.
Whichever lender we introduce you to, we will typically receive commission from them (either a fixed fee or a fixed percentage of the amount you borrow).
All of the lenders that we work with could pay commission at different rates and the commission values could vary between finance products, but the commission we receive does not influence the contract hire rate you will pay.