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Finance Options Explained

Contract Hire

Contract Hire is a rental agreement that allows you to drive a Volkswagen Commercial Vehicle without needing to own it. Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no disposal risk. You won’t own the vehicle and therefore won’t have the worry of ownership, you just have to hand it back at the end.

 

How does Contract Hire work?

Once you have chosen your vehicle you need to decide on your initial rental, how many miles you drive each year, and how long you want to lease the vehicle for. These will be used to calculate your monthly payments.

You can also choose to include a level of servicing and maintenance into your monthly rental, keeping your vehicle in good condition. 

Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.

The benefits of Contract Hire

1. You can include servicing.

As part of a Contract Hire agreement, you can include different levels of servicing, giving you one monthly payment for a vehicle and upkeep.

2. Tax deductable

If you are leasing as a business customer, you may be able to claim back the tax on Contract Hire agreements. 

3. No risks of ownership

As Contract Hire is a leasing agreement, you have no risk of the vehicle falling in value. You simply pay your monthly rentals and hand the vehicle back subject to fair, wear and tear and excess mileage.

4. Update your vehicle regularly.

As you simply hand the vehicle back at the end of each agreement, it means you are able to keep upgrading your vehicle for the newest model.

Would Contract Hire suit me?


Contract Hire is a straightforward leasing agreement, which can help a range of people get into a new vehicle. It may be the best option for you if:

  • You don’t want to own the vehicle
  • You want to upgrade regularly
  • You take good care of you vehicles

The end of your agreement


Once you have paid all outstanding rentals, you simply hand your vehicle back, subject to fair wear and tear and excess mileage charges.

Contract Hire FAQ's

Contract Hire agreements are available for both personal and business customers. Contract Hire is not available to any customer intending to use the vehicle for hire and reward purposes*

*i.e. taxis, short term hire organisations, body-shop usage, driving schools or replacement vehicle insurance claim business.

Contract Hire is ideal for customers simply wanting to pay a monthly rental for the vehicle, change it on a regular fixed period and have no depreciation risk.

  • You won’t own the vehicle and therefore won’t have the worry of ownership, you just have to hand it back at the end
  • There is no additional final payment at the end of the agreement (subject to excess mileage and fair wear and tear)- If you are a business user:
  • A proportion of the rentals may be claimable as an expense against taxable profits*
  • An element of the VAT on rentals may be recoverable by VAT registered businesses**
  • You can build in a service, maintenance and tyres plan to make budgeting even easier

*This is subject to a 50% block where there is any element of private use of a motor car.
**The above note is intended as a summary of the principles of VAT and tax in this complex area. It is not intended to be and should not be construed as constituting tax advice and we make no representations, warranties or guarantees, whether express or implied, that the content is accurate, complete or up-to-date. Volkswagen Commercial Vehicle Financial Services (UK) Limited cannot be held liable in any way for any reliance upon this document, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, even if foreseeable. For specific tax advice relating to your particular set of circumstances, you should contact your own HMRC officer or your usual VAT / tax advisers.

At the end of your agreement you will not own the vehicle as you are hiring it. You are required to pay any excess mileage or fair wear and tear fees you may have incurred and hand the vehicle back to Volkswagen Commercial Vehicle Financial Services.

  • Ownership of the vehicle will always remain with Volkswagen Commercial Vehicle Financial Services and it is really important that you keep up to date with paying your monthly rentals. Please contact us if you are having any difficulties as the vehicle may be at risk if you don’t.
  • Contract Hire agreements are not designed to be settled early. If you wish to end your agreement early (for example, due to a change in circumstances) you can request an early termination quote to cover the cost of the remaining rentals.
  • If you exceed the agreed mileage set out in your agreement then excess mileage charges will apply. If during your agreement you think you will go over your anticipated mileage then please contact Volkswagen Commercial Vehicle Financial Services to discuss the options available.
  • It is important to keep your vehicle in good condition as you may be charged for any damage that goes beyond the BVRLA’s fair wear and tear standards.

Hire Purchase

Hire Purchase is a straightforward way to pay for your Volkswagen Commercial Vehicle. You pay your deposit (which can be as little as one monthly payment), and then the balance is spread equally over one to five years helping you to select instalments that match your budget. At the end of the agreement, once you have made all the payments (including the option to purchase fee) you own your vehicle.

How does Hire Purchase work?

Once you have chosen your vehicle you just need to decide your deposit and how long you want to pay back the finance over. The amount left to finance is then divided equally over the length of your agreement to make up your monthly payments.

When you have made all repayments, and paid the option to purchase fee, you own the vehicle.

The benefits of Hire Purchase

1. You own the vehicle at the end.

Hire Purchase is a simple agreement, once you have paid all the monthly payments the vehicle is yours to sell, trade in, or keep.

2. No mileage restrictions

As you own the vehicle at the end of the agreement, there is no limit on how much you can drive the vehicle.

3. Monthly payments to suit you

Hire Purchase is a straight forward way to buy a new or used vehicle without a large financial outlay up front. By breaking down the cost of the vehicle into monthly payments, it enables you to budget reliably over the next 3-5 years.

4. Bespoke to your needs.

You determine how long you want to spread the finance over, and how much of a deposit you want to put down. This enables you to tailor the agreement to suit your situation.

Would Hire Purchase suit me?


The simplicity of Hire Purchase can help a range of people get into a new or used vehicle. It may be the best option for you if:

  • You drive a high mileage
  • You want to own the vehicle
  • You want to be able to budget for the next 1-5 years
  • You want to spread the cost of a new vehicle

The end of your agreement

Own your vehicle

Once you’ve paid all your monthly payments and the option-to-purchase fee, the vehicle is yours to keep, or to use as part exchange for another vehicle.

There is no action required from you, we will automatically close the agreement after your final direct debit payment has been collected and send a clearance letter for your records.

Hire Purchase FAQ's

Hire Purchase agreements are available for both personal and business customers. Hire Purchase is available for Taxi usage (maximum 36 month term) but not available for other hire and reward purposes*

*Body shop usage, long term sub-let agreements (>1 month), replacement vehicle insurance claim business.

  • Hire Purchase leads to ownership and is suited to customers who potentially intend to keep their vehicle for longer than the period of repayments.
  • There are no mileage restrictions.
  • Deposit as little as one monthly payment.*
  • Choose the most appropriate term to suit your monthly budget.

 

*Subject to underwriting. 25% minimum deposit applies to new and used taxis. An offer of finance depends on certain conditions. Subject to status. Available to 18s and over in the UK only. Terms and conditions apply. Volkswagen Commercial Vehicle Financial Services.

  • Pay your final monthly repayment and option to purchase fee and take ownership of the vehicle.
  • Part Exchange the vehicle for another Volkswagen Commercial Vehicle.

Yes once you have paid the final monthly repayment and option to purchase fee.

Solutions PCP

Solutions Personal Contract Plan allows you to make payments over a period of time, which may be a more flexible alternative to Hire Purchase. You can choose to put down a small sum initially and then defer a proportion of the vehicle’s value until the end of the agreement, which could reduce your payments and allows you to decide later whether you want to keep, return or exchange the vehicle for a new one.

How does Solutions PCP work?

You choose your initial payment (deposit), how many miles you will drive a year, and the length of your agreement.

This is used to work out your monthly payments and optional final payment, which gives you the ability to plan ahead with a fixed monthly outgoing.

At the end of your agreement you can then choose to:

  1. Hand the vehicle back (subject to excess mileage and damage charges);
  2. Trade in your vehicle as a deposit for a new one;
  3. Pay the optional final payment and keep the vehicle.

The benefits of Solutions PCP

1. Lower monthly payments.

By deferring a chunk of the amount you finance to the end of the contract, it means your monthly payments will be lower than if you spread the whole cost.

2. Keeps your options open

You don't have to decide what to do with the vehicle until the end of your contract, giving you the flexibility and protection needed to make the right choice for your circumstances. 

3. Protected from the vehicle losing value

We guarantee the final payment at the end of the contract as long as it comes back in the mileage and condition agreed. This protects you from any unexpected falls in the value of your vehicle and enables you to plan ahead with your finances. 

4. Get a new vehicle more often

The flexibility built into your agreement means you can keep upgrading your vehicle regularly. Great if you want to always stay in warranty, not have to deal with the long term ownership costs, or want the excitement of always driving the latest model. 

The end of your agreement

At the end of a Solutions PCP agreement you have the choice of 3 options:

Exchange your vehicle for a new one

If you want to move into the latest model, or maybe try a different vehicle altogether, your Solutions PCP agreement enables you to part-exchange your current vehicle for a new one. You will need to settle your existing agreement and then apply for a new one with us (subject to application and acceptance).

Find your next vehicle

Keep your current vehicle

If you would like to keep your current vehicle, you will need to pay your final balloon payment and option-to-purchase fee. These will both be collected automatically by Direct Debit, so you do not need to do anything. 

Once your agreement has been settled we will automatically transfer ownership to you. The closing down period takes 10 days, after which time a letter will be sent to you to confirm that we no longer hold an interest in the vehicle.

Alternatively, if you wish to keep the vehicle but want to spread the cost of the final payment we can consider arranging to refinance the final (balloon) payment for you, subject to a new finance application.

Hand the vehicle back

If you no longer wish to keep the vehicle at the end of the agreement, you can return it to us. You will still need to pay all the monthly rentals and the option to purchase fee, and further charges may apply if you have exceeded your agreed mileage, or if there are any refurbishment costs following our inspection and collection process. 

Volkswagen Financial Services will require a minimum of one months’ notice in order to arrange the vehicle collection so please contact us as soon as you know what option you want to take. Requests made after this date may result in a risk of you requiring additional Insurance, Road Tax or even an MOT, along with the possibility of the Direct Debit for the final (balloon) payment being taken.

Solutions FAQ's

Solutions agreements are available for both personal and business customers. Solutions PCP is not available to customers intending to use the vehicle for hire and reward purposes*

*Long term sub-let agreements (> 1 month), taxis, couriers, contract hire and daily rental businesses, body-shop usage, or replacement vehicle insurance claim business, not available on Crafter. An offer of finance depends on certain conditions. Subject to status. Available to 18s and over in the UK only. Terms and conditions apply. Volkswagen Commercial Vehicle Financial Services.

Solutions PCP is ideal for customers who like the idea of changing their vehicles regularly, reducing the potential period of repayments, or simply want to leave their options open for a period of time.

  • Choose the most appropriate term to suit your monthly budget
  • By deferring an agreed amount to the end of your agreement you can potentially: change your vehicle more often to suit your needs, and stay within the warranty period; upgrade to get a higher specification model; reduce your monthly payments
  • A Solutions agreement can protect you from unforeseen depreciation of the vehicle’s value- Deposits can be as little as one monthly payment, but should not exceed 50% of the vehicle value.
  • Solutions is a flexible product, giving you three options for the end of your contract. This decision doesn’t need to be made until the end of the agreement

You can own the vehicle once you have paid the optional final payment and option to purchase fee.

After you have informed us you wish to hand the vehicle back, our collection agents will contact you directly to arrange a convenient time for the Inspection and Collection of the vehicle via the contact details you have provided us with. 

 On the day of inspection please ensure that:

  • The vehicle is clean, inside and out
  • You have all the relevant documentation (e.g. service book, registration document V5, MOT certificate, etc.)
  • You return all equipment supplied with the vehicle (e.g. spare key, satellite navigation, CD/DVD, warning triangle).

The inspector will record any damage (and cost of repair) or missing equipment/documentation and you’ll be asked to sign to confirm your acceptance of the report.

Lease Purchase

Lease Purchase is a purchase product suited to customers seeking long-term ownership, whilst looking to reduce their monthly repayments. Deferring an agreed amount to the end of your agreement allows you to reduce your monthly repayments. Deposits can be as little as one monthly payment.

How does Lease Purchase work?

Once you have chosen your vehicle, you need to work out how much you can afford as an initial payment, how long you want your agreement to be, and how many miles you drive each year. 

This is then used to calculate your monthly payments and final balloon payment. 

When your agreement comes to an end you need to pay the final balloon payment in order to keep the vehicle, or trade in your vehicle to contribute towards paying off the balloon payment.

Lease Purchase is different to Solutions PCP as your final payment is not optional, meaning you have less options at the end of your agreement.

The benefits of Lease Purchase

1. You can own the vehicle

When you have made all the repayments, including the final balloon payment at the end of the agreement, then the vehicle is yours to keep and continue enjoying.

2. Lower monthly payments

By deferring a chunk of the amount you finance to the end of the contract, it means your monthly payments will be lower than if you spread the whole cost across the months.

3. Ability to financially plan

As you can break down the cost of a new vehicle into manageable chunks you can plan with confidence for the next 3-5 years.

Would Lease Purchase suit me?

The balloon payment that comes as part of a Lease Purchase agreement suits certain lifestyles, It may be the best option for you if:

  • You want to defer some of the cost of the vehicle to the end of the agreement.
  • You want to own the vehicle.
  • You want lower monthly repayments.
  • You want to spread the cost of a new vehicle.

Need Help!

Contact one of the team to find out which of the above finance options best suits you.