The Ford Transit Custom is a brilliant van. It’s Parkers’s 2021 Van of the Year, and it’s a reliable, well-built, and much-loved workhorse whatever your needs. If you’ve already decided that the Transit Custom is the van for you (maybe even with one of our amazing WASP, WASP ICE, or Hornet upgrades), you might be wondering what finance options are available. There are a few, so I’ll do my best here to demystify them.
The first thing to understand is that Ford, unlike VW and Mercedes, tends not to offer finance options for personal customers. At the moment, if you want a Transit Custom that you can keep long-term and you’re not a business of any kind, you’ll be looking at an outright purchase or possibly hire purchase. Luckily, we have great deals on cash sales here at Swiss! However, if you need finance, and you’re not bothered about keeping the van in the long term, you could consider contract hire.
This could be described as a long-term rental. There are stipulations for the maximum permitted mileage, and when you hand the van back at the end of the agreed hire term, it will be subject to an inspection. If you’ve gone over your allotted mileage or the van is damaged in any way, you might be required to pay an additional fee. The length of the term, once agreed, is non-negotiable, so you won’t be able to get out of it early for any reason.
Payments have VAT added on top, so if you are arranging contract hire as a business and you’re VAT-registered, you can claim that VAT back quarterly. Contract hire is a good way of spreading business costs out over the year as what you’re spending on the van could be seen as putting money against your tax bill.
You can opt for contract hire whether you’re a personal or business customer.
With Ford, this is only available for business customers. A finance lease is a lease with a “balloon” payment at the end: this is a large chunk of the value put to the end of the agreement to make the monthly repayments more affordable. A finance lease can be arranged over a longer term (5 years) than contract hire; this helps keep the payments down. You’re also allowed to sell the vehicle at any time and clear the agreement. The mileage limits are estimated, so while there are no additional charges for doing more miles than you initially thought, it may affect the vehicle’s future value.
As with contract hire, finance lease payments have VAT added on top, and this can be claimed back. It’s also a good way of spreading expenses over the year.
At the end of a finance lease, the vehicle is sold back to us or to a third party, and, if you’ve looked after the van well, you can often make enough from that sale to cover the deposit on your next van. It’s worth mentioning here that our upgraded vans retain their value much better than the non-upgraded models.
Again, with Ford, this is only available to business customers: specifically, those with a limited company. This is an ownership scheme with a final balloon payment. You get to keep the van at the end of the term, so it’s great if you want to do a conversion or you just would prefer not to change vans every few years.
If you’re VAT-registered, you have to pay the VAT portion of the vehicle’s cost as your deposit to be able to claim it back in the following quarter. The lease purchase scheme allows you to offset your tax bill with the entire cost of the van in the first year of the lease, so it’s great for those businesses with large profits who want to reduce their tax bills a little.
This is an ownership scheme with no final balloon payment. It’s generally only available to businesses, sole traders, or limited companies, but at Swiss, we can arrange hire purchase for personal customers too. As there is no large, final payment, monthly payments on hire purchase plans can be expensive.
The VAT and tax rules are the same as with lease purchase: if you’re VAT-registered, you need to pay the full VAT on the van as your deposit to claim it back in the next quarter, and you can offset that year’s tax bill with the full cost of the van.
All of the plans apart from hire purchase are guided by mileage. A low-mileage balloon lease plan (10k miles per annum) would incur lower monthly payments but a higher balloon payment at the end as this represents what the finance company expect the vehicle to be worth at the end of the finance term. A higher-mileage plan would have higher monthly payments but a lower balloon.
Hopefully, things are a little clearer now with regard to the various possibilities for Ford Transit Custom finance here at Swiss Vans. But if you’re still unsure or you’d like any more information about the various options, don’t hesitate to get in touch. Our friendly sales team will be happy to go through the finer points of Ford finance with you, and we’ll do our best to make sure that you find the best solution for your needs.