Car Finance for Busines Explained

Small to Medium Enterprises (SMEs) and larger companies are able to buy cars through a special form of hire purchase finance which is not available to ordinary consumers. The easiest way to understand how Car Finance for Business works is to go through the Non-Consumer Hire Purchase product from Volkswagen Financial Services.

This form of Hire Purchase works on similar principles to the consumer form. Finance is arranged for the purchase of the vehicle and fixed repayments are made over a fixed period of time, subject to interest. However, there are important differences and benefits.

For business and taxation purposes, vehicles acquired under a Non–Consumer Hire Purchase arrangement are treated as fixed assets of the company with the amount being treated as a liability.

Businesses can offset the interest element of the Hire Purchase cost against corporate tax, reducing the effective cost of borrowing. The VAT amount on the vehicle can be claimed back from Revenue in one upfront payment at the beginning of the agreement (subject to vehicle qualification rebate). VAT is not normally recoverable on cars. With Non-Consumer Hire Purchase you can defer part of the capital cost until the end of the agreement and pay the final payment, thus making the monthly instalments more affordable.

Straightforward with no tax implications on completion of the agreement

Fixed instalments provide for more accurate budgeting and forecasting

Separate lines of credit means working capital is free to be used in the business

Preserves valuable working capital and provides better cash-flow management and control.

Please note that this page describes the characteristics of Hire Purchase from Volkswagen Financial Services, terms from other providers may vary.  For more details about VWFS including terms and conditions, visit VWFS.ie
 

Hire Purchase car finance is a straightforward route to ownership, whether you are buying a new or used car. Finance your car over a period of time that you choose.

PCP stands for Personal Contract Plan and this type of car finance is available for both new and used cars. PCP finance is popular because it typically involves a flexible 2-3 year car finance package with lower monthly payments.

Cost considerations such as Residual Values, Total Cost of Ownership, After Sales Service and Reliability are at the centre of the Volkswagen Fleet offering – but without any need to sacrifice quality, performance or style.

An electric car could make more of a difference to your business than you think.