The importance of vehicle finance

There are numerous excellent vehicle finance solutions available for business owners, directors, employees, and the self-employed. With a variety of options, a vehicle can be acquired for both personal and business use without large upfront costs, instead offering a fixed monthly payment plan. Vehicle finance provides flexibility, tax benefits, and efficient cash flow management.

Let’s explore the options in more detail.

Company Vehicles for Business Owners and Directors

• Financing company cars used by directors and employees for general business purposes.
• Acquiring large fleets of vehicles to support business expansion, sales teams, service teams, and delivery teams.
• Leasing agreements to ensure all vehicles are periodically upgraded, keeping them reliable and up-to-date.

Vehicles for Self-Employed Professionals

• Financing vehicles used for traveling to client sites, attending meetings, or working at various job locations.
• Acquiring specialized vehicles needed to fulfill specific job roles, such as refrigerated vans or prestigious cars for chauffeur services.

Vehicle Finance Solutions

Depending on specific needs, several vehicle finance solutions can be selected:

• Hire Purchase (HP): Allows payment for a vehicle to be staggered over a fixed period through monthly installments. Ownership of the vehicle transfers to the buyer once the final payment is made.
• Finance Lease: Ownership of the vehicle remains with the leasing company. An upfront cost plus monthly payments are made, with options at the end of the lease to extend, purchase outright, or return the vehicle.
• Operating Lease: Similar to a finance lease, but service and maintenance costs are included in the fee. The vehicle is returned at the end of the agreement.
• Personal Contract Purchase (PCP): A lower monthly fee is paid, with a larger final payment required if the individual chooses to keep the vehicle.
• Contract Hire: A long-term rental agreement for a business, allowing the lease of a vehicle without the intention of ownership.

Benefits of Vehicle Finance 

For Business Owners and Directors:

• Lease payments and interest on finance can be deducted as business expenses, reducing taxable income.
• A VAT-registered business can reclaim the VAT on vehicle purchases or lease payments.
• With an operating lease, a vehicle can be excluded from the balance sheet, helping to improve financial reporting.

For Self-Employed Professionals:

• Vehicle expenses, including mileage, lease payments, and ongoing running costs, can be reclaimed.
• Specific schemes, such as capital allowances, provide tax relief when vehicles are purchased.

As always, it is best to consult with business finance specialists to fully understand the options based on individual circumstances. Key considerations include the total cost of the finance required, any restrictions such as mileage limits, and whether full ownership or leasing is the best solution.

Case Studies: The NGI team is highly experienced in vehicle finance. Recently, we provided a personal finance solution of £105K to purchase a Range Rover and worked with a business to purchase refrigerated vans, each worth £50K.

If you need help or have questions regarding vehicle finance, please call our team on 01993 706403 or email enquiries@ngifinance.co.uk.