A 'Purchasing' style contract suitable for non-VAT registered companies who require eventual ownership of the vehicle.
This is a method of financing a purchase with the vehicle becoming the property of the lessee at the end of the period. The monthly payment is determined by the amount of deposit paid, the period of the contract and the sale price of the vehicle. There is usually an option to have a final balloon payment, thus reducing the monthly payments, and on payment of this balloon amount legal ownership passes to the user who can choose to keep or sell the vehicle.
The loan is secured against the vehicle. In the event of the vehicle being sold before the end of the agreement the user would still be required to pay the loan back in full.
The vehicle appears on the balance sheet and purchase can claim a capital allowance for its depreciation as an asset.
The interest elements of the lease purchase fee can be offset against taxable profits.
Features and benefits:
- Choose from any make or model of vehicle, new or nearly new
- Contract periods can be selected from between 24 months and 60 months, with or without a balloon payment at the end of the contract (subject to the age of the vehicle at the start of the contract).
- There are no mileage restrictions.
- The contract can be settled early
- Fixed monthly rentals allow for accurate monthly budgeting
- Title passes to the end user when all payments have been made including any balloon and the option to purchase fee
- You retain 100% of any equity in the sale of the vehicle
Things to be aware of:
- You bear all the running costs for the vehicle
- The balloon payment must be paid for at the end of the contract
- The vehicle is yours once you have paid the balloon payment. In some cases the balloon can be higher than the residual value
- Dedicated funding product, which does not include maintenance or any other value added services
- You must have fully comprehensive vehicle insurance