When it relates to car financing, accommodation refers to someone taking out finance on behalf of someone else. This could be a parent taking out an agreement on behalf on their child, or perhaps even a husband/wife taking out the agreement on behalf of their spouse. Whilst not illegal, it isn't often allowed. Extenuating circumstances are sometimes permitted but only with prior written consent from the funder. If in doubt, contact your funder.
Administration Fee/ Processing Fee
Below every deal on the Carparison website will be a breakdown of the deal overview, detailing the inclusive features and applicable fees. One of these will be a Processing Fee (otherwise known as an Administration Fee), and in our case, the Carparison Processing Fee is a set cost of £298.80 inc VAT. This covers the costs of securing, advertising and processing the deal (and providing you a 5* rated service along the way!). The Processing Fee is only due when the order has been placed and the finance application has been successful.
The balloon payment, formally known as the Optional Final Payment, is one of those terms that many have heard of, but when it comes down to the nitty gritty of it, sometimes don’t quite understand. The balloon payment is the outstanding figure that is left to pay should you wish to own the car outright at the end of a PCP agreement. A larger balloon payment may result in more attractive monthly costs, but a less than attractive lump sum that may make ownership unaffordable at the end (hence why many then simply hand the car back).
So how is a balloon payment calculated? One thing is 100% sure. A dealer will always have to give you the optional final payment figure before you take out a PCP deal – so there should never ever be any unexpected numbers when it comes to the end of your agreement. The only situation in which that might differ is if you decide to terminate your contract early, and then the question of equity is raised (see below in our guide for more info on that).
The balloon payment is also known as the car's guaranteed minimum future value, and is an estimate of how much the car will be worth at the end of your agreement. The dealer, or lender – whoever you’re getting the car from – will use industry guides to calculate how much the car will depreciate during the contract term. Remember, the interest you are paying on a PCP includes the full cost of the vehicle and this therefore includes this balloon payment even if you don’t end up taking it.
BCH (Business Contract Hire)
There are two types of Contract Hire: Personal Contract Hire (PCH) and Business Contract Hire (BCH). BCH is for companies wishing to lease a vehicle or fleet of vehicles for a set monthly cost, allowing them to save money on the cost of vehicle ownership whilst driving in the latest models. In order to take out a car lease on BCH, you must be a Sole Trader, Partnership, PLC or Ltd Company.
When advertised, BCH rates will be displayed excluding VAT whereas PCH rates are advertised including VAT. This is because, depending on usage, the business will be able to claim back either 50% or 100% of the tax on the vehicles they lease.
BIK (Benefit In Kind)
If you have a company car that you use for private use, then you’ll have to pay something called a Benefit in Kind (BIK) contribution. This is a tax charged on benefits or perks that an employee receives on top of their salary – i.e. a company car or private health care.
To calculate a vehicle's BIK tax, just multiply the P11D value with the BIK percentage banding and then times that figure by your tax band (20% or 40%). You can read more about company car tax here.
That’s us! Carparison are a broker, or a Leasing Broker to be exact, with the aim of taking the leg work out of finding you your new lease van, car or commercial vehicle. As a broker, we scour the nation, working with funders and dealerships to find the best lease deals on the market and offer them to you, all in one place.
This is the money Carparison earn from the Funder for introducing customers to the lease deal. Carparison are proud to lead the way as the first leasing broker in the UK to offer full commission disclosures online, for both personal and business contract hire agreements. This commission is stated clearly under each lease deal on our website, and importantly is already reflected in the advertised lease costs and does not affect the ranking of the deal on site.
Company Car Opt Out
If an employee Opts out of company car, their company therefore may provide a company car allowance that they can use towards a personal agreement. Whilst this may mean greater freedom in terms of vehicle choice, depending on the company they still may stipulate the age and manufacturer that the vehicle must be. It is also worth remembering that the employee will be charged their usual tax rate on this additional income and will also then be responsible for the maintenance and insurance etc. for that vehicle.