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At Bridgegreen Environmental Finance our vehicle leasing, renewable energy technology finance and capital equipment asset finance products include:
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Contract Hire |
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Contract Purchase |
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Finance Lease |
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Operating lease |
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Hire Purchase |
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Lease Purchase |
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Personal Contract Hire |
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Personal Contract Purchase |
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Sale and Leaseback |
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Commercial Loans |
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Using the most appropriate form of funding will enable our customers to:
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Offset costs against tax |
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Avoid paying VAT up front |
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Benefit from keeping assets off balance sheet |
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Benefit from keeping assets on the balance sheet |
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Raise funds through selling an existing asset and leasing it back |
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Benefit from changes in technology by handing back an asset after a set period of time |
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For a more detailed understanding of the financial products Bridgegreen can offer please read on:
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Contract Hire
Contract hire is a fixed term agreement, used for vehicle financing typically, based on a predetermined annual mileage. The depreciation risk is removed from the customer and a single, fixed monthly payment (including road fund licence) ensures that you know exactly what your cash outflow is at the outset of the contract.
Additional services can be arranged to include vehicle servicing and maintenance, tyres and exhaust replacements, breakdown assistance, and relief vehicle facility. The funder reclaims the VAT on the purchase price of the vehicle, which in turn reduces your monthly payments.
Contract hire payments are also tax deductible (within certain set parameters). The initial deposit is normally the equivalent of three monthly payments, although this can be as low as one payment if you prefer.
Purchasing of the vehicle is handled by the funder, as is disposal, making the whole process simple.
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Contract Purchase
Contract purchase utilises the future value of a vehicle to reduce monthly costs. This value is guaranteed based upon an agreed, predetermined annual mileage and allows an option to either purchase the vehicle for this price or simply return it to the funder with no extra cost at the end of the contract (subject to mileage and/or condition). Service and maintenance can also be included where required.
The depreciation risk is not borne by the customer. Initial payment requirements are generally low. Pre-determined costs and a fixed term mean that there is a fixed monthly cash outflow. The funder arranges the purchase and disposal of the vehicle and so the whole process for the customer is simple.
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Finance Lease
With finance lease the funder takes full ownership of the asset and rents the goods to you over a predetermined period. The funder claims the writing down allowances and conveys this benefit to you by reducing the rentals.
In addition the purchase price used to calculate the rental is the purchase price net of VAT. Thus, if you are acquiring a VAT qualifying vehicle (for example a new vehicle), the rental is calculated on the net price of the vehicle (without VAT) as opposed to the gross price if funded by hire purchase. The rentals attract VAT but this can be recovered subject to eligibility. The initial payment is usually a multiple of rental (say three months) and the rentals are fixed for the duration of the contract.
As with hire purchase, you can include a balloon rental to reduce the value of the primary rentals. At the end of the agreement you may have the option to enter into a secondary period. As you have generally covered the entire capital cost of the asset and hire charges (interest) in the primary period, should you wish to continue to use the asset, the secondary or peppercorn rental is charged.
As you are not the owner of the asset, you cannot sell the asset during the rental period. However, as you are generally covering the total cost and hire charges within the primary period, you will be entitled to a share of the sale proceeds should the funder allow you to sell on their behalf. Your share of the sale proceeds is usually agreed at inception and is typically 95-99%.
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Operating Lease
The only difference between an operating lease and a finance lease is that the primary period rentals do not cover substantially all of the capital cost and hire charges. For example a lease for a printing press costing £400,000 may include a residual value at the end of the primary period of £150,000. The primary rentals are thus based on £250,000 and not the capital cost of £400,000.
Due to the fact that the asset needs to be sold on at the end of the primary period to recover the residual value, it is very rare for an operating lease to have a secondary rental period. In some instances the funder may structure a finance lease for you to 'wash-out' the residual position.
With an operating lease you may source the supplier, but it is often the case that the leasing company can acquire the asset for you cheaper (for example car leasing companies). You will have to pay any documentation fee and an initial payment of a multiple of rentals. The rentals attract VAT that can be recovered subject to eligibility. As the finance company is the owner of the asset, you will not need to pay the purchase VAT at inception.
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Hire Purchase
Hire purchase is the most typical and readily available credit facility. In basic terms, you source the asset and negotiate the purchase price with the supplier. You pay a deposit to the finance company, typically 10-20%, and the finance company then takes title direct from the supplier.
Even though you are technically not the owner of the asset during the agreement, subject to eligibility you can still claim the writing down allowances as though you had made the purchase outright.
At inception you would usually be required to pay a documentation (or administration, arrangement) fee of £100-250 and the full purchase VAT. You will then, subject to eligibility, recover the VAT yourself. You repay the outstanding amount and interest in pre-agreed instalments over the period of the agreement.
At the end of the agreement you obtain title through the payment of an 'Option to Purchase Fee'. This fee is often a token gesture to transfer title, but some finance companies do still charge a significant fee of £10-150. Hire purchase agreements can be based on a fixed or variable rate, and the monthly commitment can be reduced by the inclusion of a balloon.
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Lease Purchase
Lease purchase is practically identical to hire purchase, the only difference being that instead of paying a deposit of 10-15% you typically pay a deposit as a multiple of the repayments. The remaining balance and interest is repaid in instalments. The number of instalments is defined by the pause.
As an example, a hire purchase agreement would have a 10% deposit followed by 36 monthly repayments. The equivalent lease purchase would have a profile of 3 payments in advance followed by 33 (if terminal pause) or 35 (if spread pause) monthly repayments.
Your eligibility for the VAT and writing down allowances is exactly the same as for hire purchase. Again, lease purchase agreements can be based on a fixed or variable rate, and the monthly commitment can be reduced by the inclusion of a balloon.
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Personal Contract Hire
Personal contract hire works on the same basis as contract hire. The differences relate to the VAT treatment. With contract hire a VAT registered business can recover some or all of the VAT. With personal contract hire the VAT on the monthly payment is fully payable. In addition the payments cannot be set against tax. All of the other significant benefits of contract hire remain.
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Personal Contract Purchase
Personal contract purchase has been specifically designed for the consumer. It utilises the future value of the vehicle to reduce monthly costs. This future value is guaranteed and based on an agreed predetermined annual mileage. There is an option to either purchase the vehicle for this price or simply return it to the funder with no extra cost at the end of the contract (subject to mileage and/ or condition). Service and maintenance can also be included where required.
The initial payments are generally low, typically three payments in advance. The funder sources and disposes of the vehicle making the whole process simple for the customer. Because the future value is guaranteed, you do not have any depreciation risk.
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Sale and Leaseback
Sale and leaseback enables businesses to release capital tied up in machinery or equipment they already own. This could be a vehicle or a piece of refrigeration equipment. This enables the business to have a rapid cash injection which could be used to fund continued growth and expansion.
A sale and leaseback can enable the re-financing of a wide variety of assets and equipment. Typically it is used to re-finance printing machinery, machine tools, manufacturing machinery, contractors plant, cars, commercial vehicles, buses and coaches.
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