— BVRLA Guide to Vehicle Funding —
O
Operating lease Any lease under which most of the risks and rewards of ownership are borne by the lessor. Under current accounting rules, the fixed assets in an operating lease will remain on the balance sheet of the lessor and not the lessee. See Contract hire, page 39
P
Personal contract hire Personal contract hire is essentially the same as regular contract hire, but applies to individuals. However, as an individual, the customer will not be able to take advantage of any tax allowances or recover any VAT. Personal contract purchase An agreement between a finance or leasing company and an individual private purchaser of a vehicle. The agreement is normally based upon a conditional sale or credit sale agreement and, dependent on the amount of credit, may be regulated by the Consumer Credit Act. In other respects, the arrangements are similar to corporate contract purchase. It should be noted that personal contract purchase is not leasing and should never be described as personal leasing or personal contract hire. See also Contract purchase, page 40 Present value (also net present value) The present value of a sum of money receivable at a future date is that amount which if invested today at an interest rate (the discount rate) would grow to yield the same amount at that future date, eg using a discount rate of 10%, £100 would yield £110 in a year’s time, and thus the present value of £110 using a discount rate of 10%, is £100.
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