Business Car Finance Options Explained

Many businesses have company cars that are available for employees to travel to and from meetings, conferences etc. or that advertise the company. There are five business finance options available. We have outlined briefly each one to allow businesses to gain a better understanding and help them to make a decision.

Business Contract Purchase

Business contract purchase allows the business to purchase the vehicle at the end of the agreed lease period. The price of the vehicle is agreed before the initial contract is signed.

Business Contract Hire

This option of car finance for businesses is relatively straightforward. The dealer agrees with the business a fixed monthly payment payable over a fixed period, usually between 2 to 4 years. The business pays the agreed amount over the course of the contract. At the end of the agreed leasing contract the business simply hands the vehicle back to the dealer. With this option of business contract hire there should be no payable lump sum at the end of the agreement.

The business can either walk away or agree on another contract on another vehicle with the same dealer

Business Hire Purchase

Business Hire Purchase allows businesses to pay a fixed amount over an agreed period, usually 12 to 60 months. At the end of the contract period the business pays a nominal fee and obtains legal ownership. This is the same agreement as PCP (personal contract purchase). The monthly amount payable is determined by   the total value of the car plus interest this is then divided by the number of months the business wishes to pay for the vehicle over.

With this option of business car finance the monthly payments are much higher than that of contract hire or contract purchase because the business must pay for the entire cost of the vehicle.

Business Car Loan

There are two options of business car loan. They are as follow;

  1. Secured car loan – this option of financing a vehicle is similar to hire purchase. The finance company owns the vehicle until all money borrowed from the company is repaid. If there is a default in the repayments the finance company takes the vehicle from the business.
  2. Unsecured car loan – this option means that the loan taken out to finance the vehicle is attached to the business and not the car. The business will own the car from the date of purchase. If there is a default in the repayments the finance company takes legal action direct to the company for repayment. This type of business car loan is often more expensive.

Jade works on behalf of UK Car Contracts, an affordable business and personal vehicle leasing company. To view their latest deals visit