Lease Purchase is an agreement for private individuals and businesses where the customer has the option to own the vehicle at the end of the agreement. It is similar to a standard Hire Purchase agreement, but offers lower monthly repayments due to a proportion of the vehicles cost being deferred to the end of the agreement by means of a "balloon" payment. The balloon payment can be tailored to your exact requirements at the beginning of the agreement by using your anticipated contract mileage as a guide to the vehicles future value at the end of the contract. Fixed monthly repayments are made over an agreed period until the end of the contract where you will then have the option to pay the final balloon payment and keep the vehicle or part exchange the vehicle for a new one. The final balloon payment isn?t guaranteed which means that there will not be any unavoidable excess mileage charges at the end of the contract, should you exceed your expected contract mileage.
Key Benefits of Lease Purchase
Low initial deposit
Lower fixed monthly payments
A better vehicle - lower payments give you the option of a better vehicle
Vehicle ownership? Writing down allowances available for business users
VAT- payments do not attract VAT.
Disadvantages of Lease Purchase