hire purchase

nickb_2581

Hello

Im in the process of sourcing vehicles for my self drive vehicle hire company. One of the avenues im pursuing is “Hire Purchase” it seems a good move as the company im using do not require any deposit (good credit history) and are still competitive in the monthly repayments to finance leasing, contract hire etc. What im aiming to do is use the loophole where legally you can pay half of the repayments then write to the finance company cancelling the contract without suffering any financial penalties. Therefore being able to pay monthly repayments on a 5yr agreement but only for 2 ½ years which enables me to give the vehicle back, yes I wont be entitled to any resale money but ill be able to use the vehicle as I wish with unlimited mileage then replace after 2 ½ yrs rather than 5 keeping the fleet new. My main question is has anyone any experience of using this method and how hard it actually is to cancel the agreement and how hire purchase is affected by V.A.T (ive read its not optimal for limited companies on claiming this back) and what tax id be liable for.

Thanks in advance for any advice.

RichardV6

Hi There,

The implications are pretty severe I'm afraid.

Cancelling the contract is totally legal.
However you will find that this is normally used as a last resort for people who are struggling with the payments.

You will find out that your credit rating will be affected by this if you continually cancel credit agreeements at the half way mark.

Sorry that this isnt what you want to hear but thought I should let you know,

Regards

Richard

nickb_2581

thanks for the advice richard. taken on board. any advice on the best way to go regards this issue then....