Use our Funding Matrix

Choosing the right van is only one aspect of making effective fleet decisions for your business. Choosing the most cost-efficient funding method is just as important. Our Funding Matrix gives you the basic information on all the options regardless of which vehicle manufacturer offers them. More detail is then provided below.

Contract hire lease Finance lease Flexible rental Contract purchase Lease purchase
Own at expiry tickOperator’s choice tick
Return at expiry tick tick tick tickOperator’s choice
Residual risk Leasing company Operator Leasing company Leasing company if returned Operator
Excess mileage or damage charges Yes No Yes If vehicle is returned No
Can maintenance be included? Yes Yes Included in rental cost Yes No
VAT reclamation Yes Yes Yes Not charged on rental; 100% on other services Not charged on rental
Contract Hire Lease

Essentials

  • Vehicle hire for a predetermined mileage and period. Return to leasing company at end of contract term

Finance

  • Initial sum, followed by equal monthly payments
  • Volkswagen Financial Services | Fleet uniquely allows inclusion of electric vehicle charging point installation costs (at driver’s home; net of available grants) within the monthly payment

Options

  • Service and maintenance may be included within the contract

Pros for Contract Hire Lease

  1. The leasing company bears the residual value risk
  2. Service and maintenance – if included – can be carried out at franchised dealers using genuine parts and latest software updates

Cons for Contract Hire Lease

  1. End-of-contract charges may apply for excess mileage, and for damage beyond fair wear and tear
Finance Lease - Full Payout

Essentials

  • Hire the vehicle for a predetermined period

Finance

  • Initial sum, followed by equal monthly payments with no final rental payment at the end of the contract

Options

  • As you have no outstanding payments, you may sell the vehicle at the end of the contract and receive up to 100% of the sale proceeds + VAT as a rebate of rentals
  • You can extend the lease into a secondary hiring period, by paying an annual ‘peppercorn’ rental in advance. You can then keep using the vehicle until sold (as above) when you receive up to 100% of sale proceeds as a refund of rentals
  • Service and maintenance may be included within the contract

Pros for Finance Lease - Full Payout

  1. No end-of-contract charges

Cons for Finance Lease - Full Payout

  1. Monthly payments are more expensive
Finance Lease - Balloon

Essentials

  • Hire the vehicle for a predetermined period

Finance

  • Initial sum, followed by equal monthly payments, then a final rental (known as the balloon payment) at the end of the contact
  • The balloon payment can be set to suit your cash flow requirements

Options

  • Sell the vehicle at end of contract, and use the proceeds to settle the balloon payment
  • Settle the balloon payment and enter into a secondary hiring extension period, paying an annual ‘peppercorn’ rental in advance
  • Service and maintenance may be included within the contract

Pros for Finance Lease - Balloon

  1. No end-of-contract mileage or damage charges

Cons for Finance Lease - Balloon

  1. You carry the residual risk
Flexible Rental

Essentials

  • Hire the vehicle for a minimum of 28 days, with the option to extend for as long as you need it

Finance

  • No upfront payment required (subject to credit checks), regular monthly payments for the duration of the contract

Options

  • Monthly invoicing in arrears is available, subject to credit checks

Pros for Flexible Rental

  1. Add the right vehicles to your fleet when you need them, without the traditional long-term commitment
  2. Guarantee of a low-mileage Volkswagen Group vehicle no more than 18 months old, with the option to change to another Volkswagen Group model mid-contract, with no penalty
  3. The leasing company carries the residual value risk

Cons for Flexible Rental

  1. End of contract charges may apply if the vehicle is returned with any damage, or has exceeded any agreed mileage limits
Contract Purchase

Essentials

  • Hire the vehicle for a predetermined period

Finance

  • Initial sum, followed by equal monthly payments. At the end of the contract you can make the balloon payment to keep the vehicle, or return it to the leasing company.

Options

  • Service and maintenance may be included within the contract

Pros for Contract Purchase

  1. The leasing company bears the residual value risk

Cons for Contract Purchase

  1. If returned to the leasing company, end-of-contract charges may be incurred for excess mileage, and damage beyond fair wear and tear
Lease Purchase

Essentials

  • A form of conditional sale

Finance

  • Initial sum, followed by equal monthly payments. At the end of the contract you must make the balloon payment and the vehicle becomes your property

Options

  • The balloon payment can be set to suit your cash flow requirements

Pros for Lease Purchase

  1. No end-of-contract mileage or damage charges

Cons for Lease Purchase

  1. Service and maintenance cannot be included in the contract
  2. The balloon payment may be greater than the vehicle’s value

Alternatively, if you own your vehicles but want to sell them to release capital (e.g. for investment into your business), you can sell them to the leasing company for an agreed sum and lease them back. Details of the lease depend on which leasing option has been selected, but ultimately follow the same format of an initial rental, followed by monthly payments with an agreed end of contract arrangement (full payout or balloon payment) as per the options mentioned above.


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