Vehicle Consulting - Finance Lease and New Rules for Young Drivers?
Iain Paston from Vehicle Consulting explains how Finance Lease works and confirms the suggestions for new rules which could affect young drivers in the future - worth bearing in mind if you employ apprentices...

The mysteries of vehicle finance

Finance lease is a flexible form of finance, where the customer/end user enoys all the benefits of use without ownership and is a popular way of funding commercial vehicles. The agreements can be drawn up with or without a residual value (balloon), and can be written down on 2, 3, 4 or 5 years.

The asset is owned by the finance company, but the V5 should be in the customers name usually registered C/O of the finance company. The asset always remains under the ownership of the finance house and title cannot pass to a third party.

The big difference between this and a Contract Hire agreement is that the hirer is responsible for any Residual Value payments, and therefore accepts the Risk or Reward of this agreement.

The customer will retain a percentage of the sale proceeds when he sells it to an independent third party. E.g. the customer owes £5,000 balloon and sells the vehicle for £6,000, the finance company will have to receive the £5,000 balloon and will usually retain 2.5% of the sale proceeds. (On this example a further £150). Conversely, if he sells it for £4000, he will owe £1000 more for the balloon plus 2.5% of the sale proceeds making it another £100.

New rules for young drivers?

A Government committee has recommended that the minimum driving age must be raised from 17 to 18 to stop young people "killing themselves and others". The Commons transport committee also wants learner drivers to spend at least a year learning to drive before taking the test and a complete alcohol ban for new drivers.

Novice drivers should be banned from carrying passengers aged between 10 and 20 late at night, the report adds.

Government figures show that one-third of road deaths involve a car driven by a person aged between 17 and 25, although this group accounts for just one in eight licence-holders.

In 1992, there were 12.6 deaths on the road for every 100,000 motorists aged 17 to 20. By 2005, the figure had risen to 19.2.

Other proposals in the MPs' report, called Novice Drivers, include:

- people learning to drive from the age of 17, but not taking the test until they are 18
- drivers completing a set minimum number of lessons with a structured syllabus
- extending hazard-perception training using computer simulators to encourage better habits in young drivers-to-be
- a zero alcohol limit for all drivers for a year after passing their test
- banning drivers from carrying passengers aged between 10 and 20 from 11pm to 5am for a year after passing their test


For more information visit www.vehicleconsulting.com or contact Iain directly on 01905 826282 or email iain.paston@vehicleconsulting.com.

<back to previous page