Finance Lease
Companies can lease Iveco vehicles without making a capital outlay that impacts
their balance sheets. This means that they can channel financial resources into
their core business. The vehicle is hired to the customer for a fixed period
without the option of ownership. At the end of the period, the customer may
choose to continue to rent the asset for a further period at a nominal rental
(a peppercorn rental), or to act as an agent in the disposal of the asset. The
vehicle is shown as an asset in the customer's accounts balance sheet but
Capital and Writing Down allowances are not allowed. However, the customer is
further able to offset the full amount of rentals, as they are paid, against
future tax liability. Iveco Capital accounts for the VAT liability of the asset
and the customer is only liable for the VAT on the rentals as they become due.
Lease Purchase
Lease Purchase is Hire Purchase by another name. The only difference is in the
presentation of the installments that are derived in the same format as the
lease, thus the term "initial deposit" becomes a multiple of rentals,
for example, "three rentals in advance".
Hire Purchase
Hire Purchase is a financial agreement in which the customer effectively hires
the vehicle from Iveco Capital for an agreed fixed term at the end of which,
upon payment of an agreed nominal Option to Purchase fee, ownership passes to
the customer. Whist legal title in the asset will belong to Iveco Capital until
the end of the agreement, the hirer is the Registered Keeper and may show the
asset on their balance sheet and claim the appropriate Writing Down and Capital
allowances. An initial deposit is paid, together with the full VAT amount.
Customers are then able to reclaim the VAT in their next returns. The HP
installments are based on outstanding capital and interest. Once the Option to
Purchase has been exercised, the customer is free to dispose of the asset,
retaining the full proceeds from the sale.
Operating Lease
An Operating Lease is an agreement where the asset is treated as an off balance
sheet item. The agreement is issued with Return Conditions, putting the onus on
the customer to meet fixed parameters for the vehicle condition and mileage.
The advantage of this agreement is that rentals are significantly lower than
under a Finance Lease. At the end of the agreement the customer can choose to
extend the agreement or simply return the vehicle, leaving Iveco Capital to
dispose of the asset.
Key Features
This table will allow you to identify key features at a glance..
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