Lease Purchase is for people who would like to own a vehicle but do not necessarily have the money to buy one immediately
Lease Purchase is the finance option that specifically applies to people who wish to purchase a new vehicle but who don’t necessarily have the funds in place to buy at that moment.
Ideal for those who are non-VAT registered, Lease Purchase enables those drivers, who wish to take ownership eventually, to fund their new vehicle.
The advantages to choosing a Lease Purchase:
- Ideal for non-VAT registered customers who want eventual ownership of the vehicle
- Lease Purchase frees up finance for other aspects of your company
- Low initial payment
- The vehicle will appear on your balance sheet and you can record the value against taxable profits
- Monthly payments are not subject to VAT
- Fixed mileage contract
- Effective budgeting with balloon facility, ownership of the vehicle is acquired once the balloon has been paid in full at the end of the contract
- The vehicle will become a company asset
Disadvantages to choosing a Lease Purchase:
- Dedicated funding product, which does not include maintenance or any other value-added services
- The balloon payment must be paid for at the end of the contract
- You must have fully comprehensive vehicle insurance
- The vehicle is yours once you have paid the balloon payment. In some cases, this balloon can be higher than the residual value.
More Information on Lease Purchase:
As are other leasing contract types, Lease Purchase is a flexible product, only that this product is designed for those wishing to take ownership once the agreement has finished. Customers can reduce monthly costs by choosing a larger initial down payment. So, as a means of financing to buy, Lease Purchase is a popular choice.
When choosing to Lease Purchase, monthly payments are calculated on the difference between the vehicles depreciation value plus interest and the vehicles retail value. As such, this method of financing, when applied to vehicles that retain their value, can and will perform well in your favour.
As stated, Lease Purchase agreements are only suited for customers who wish to own their vehicle after their final payment, unlike Contract Purchase where the customer has the choice to also trade-in or hand the vehicle back.
With Lease Purchase you are committed to buying the vehicle at the end of the agreed fixed term, paying any attached contractual balloon payments. Terms range from 2 to 4 years and with Lease Purchase, the customer can settle the remaining amount at any point during their agreement.