VAT Increase And The Effect On Leasing

Wednesday, 28. October 2009

As you are probably aware the VAT rate will increase back to 17.5% on the 1^st January 2010 with further rises expected as we move out of recession. Some pundits are already predicting a rise in rate to 20%. We will start to see interest rates shift upwards and car prices will continue to rise making this year a good time to take out a PCP if you are thinking of this form of finance. Mercedes have seen this opportunity and provided a wide range of cars on PCP. All cars need to be registered by the end of 2009 in order to attract the 15% VAT rate which is not recoverable by the finance company when the vehicle is financed on a purchase scheme. Once the monthly repayments have been calculated using current interest rates they are fixed for the course of the contract. My advice is therefore to act quickly if you would like to benefit most out of the current VAT rate and low interest rates. I have listed a number of Mercedes on special offer at the moment. By Graham Hill