Guidance

Vehicle funding

More and more companies are choosing to acquire vehicles through some form of funding agreement rather than buying them upfront. They have a choice of either purchasing or leasing them. Both forms of funding usually involve paying a regular amount over a contracted period, typically three years or 60,000 miles in the case of company cars. 
 
Purchase-based funding methods include hire purchase and contract purchase. Lease-based methods include contract hire and finance lease.
 
Before opting for a funding method, an organisation needs to consider the overall cost of each approach, the flexibility it provides, how it will affect the balance sheet and what the potential tax implications are.