Dealer discourages leasing/Personal Contract Hire because you can't claim VAT?

wonderwall0

I went into a car dealer and both the sales person and the business manager tried to dissuade me from taking the car out on lease because the VAT payments would not be reclaimable they said they only offered leasing to business customers and if you were a business unless you were VAT registered you would not be able to reclaim the VAT and thus a lease would not be advisable and said PCP would be better for an individual customer and the business manager claimed they would never recommend leasing or personal contract hire to a individual/personal customer. Is this the case? Why would a dealership be so hesitant to offer leasing apart from if they wanted to sell a PCP? Does leasing work out worse if you cant reclaim VAT compared to a PCP? Many Thanks for your help in advance.

DUTR

So you base the market place on one dealer visit?
What happened to customer choice?
Why didn't you try elsewhere?

neilmcl

Well it seems obvious that there's a benefit to the dealership shifting PCP deals rather than personal contract hire, simple as that. They haven't said you can't have a private lease so either stick to your guns if you want one or go elsewhere.

You'll probably get a better lease deal via a specialist lease company than you will with the dealership anyway. Try http://www.lingscars.com

bigjl

Well they aren't lying.

A VAT Reg Business will reclaim the VAt making the car effectively cheaper.

Can't say it will make much difference other than that.

Neil has posted a Link to Lings Cars and I have personally never heard anything negative about her other than the fact her website is a bit chaotic.

Unless real cheap and all inclusive it will probably work out cheaper to have traditional HP.

Had one PCP deal back in '99 when they first started to become popular.

Has all the disadvantages of buying and leasing, a bit like a Part Rent/Part Buy Property.

AdrianC

If you're looking at business lease prices, they'll be quoted as excluding VAT. So £300/mo, say, would actually cost a non-VAT reg individual £360/mo. That assumes an individual would qualify for that particular lease deal - there's nothing to say that businesses can't be offered different prices to individuals.

WellKnownSid

AdrianC wrote: »

If you're looking at business lease prices, they'll be quoted as excluding VAT. So £300/mo, say, would actually cost a non-VAT reg individual £360/mo. That assumes an individual would qualify for that particular lease deal - there's nothing to say that businesses can't be offered different prices to individuals.

VAT registered businesses can ONLY make a partial reclaim of VAT so the actual price to a business user would be £330/month. There are exceptions, but not for cars.

Most business deals are also available to individual customers. There are exceptions - and an example would be a manufacturer who wants to get into a particular business channel and have put together extra incentives - leasing to a individual would not be allowed under those circumstances.

In general, however, the statement 'business users only' simply refers to the fact the figures are ex-VAT because retailers are supposed to quote prices with VAT included.

Mikebesty

It'll be that the dealer is heavily incentivised on the PCP offering, just out of interest why would not being able to claim the VAT back be an issue, is it for personal use?

Even with the VAT being charged most PCH deals are cheaper on the monthly than any PCP

mark5

Leasing is usually cheaper, pcp has the potential to carry equity in to the next car but costs more usually for the term of the contract.

My golf would have cost a few thousand more over 36 months on pcp, I doubt it will have that much equity in it when the time comes to change.

Pcp has the right to purchase though,.

Leasing also means I don't pay the road fund licence.

What car do you want, compare the 2 but don't forget to deduct any value left in the pcp at the end from its total costs.