Lease purchase is a similar to hire purchase apart from it includes a residual value or 'balloon payment' at the end of the agreement. This 'balloon' is based on an estimated value of the vehicle once the agreement has expired and the final payment has been made, this is normally based on your agreed, annual mileage. The difference between the 'balloon' and the current price of the vehicle, plus the interest, is spread over a pre-agreed period of time.
With a lease purchase you benefit from lower monthly payments with the 'balloon' due at the end of the loan term.
Lease purchase is available to private individuals and to business customers.
You can settle a lease purchase agreement at any time during the life of the loan, and when all is paid, the car is yours to keep or sell on.
Business users can claim tax relief on the interest charged and the vehicle is classified as an asset. Speak to your accountant for further advice on tax and VAT implications of this product.
PCP is very much the same as lease purchase as it includes a residual value at the end of the loan and it based. However, it is only available to private individuals and and the vehicle is guaranteed to be worth at least the value of the 'balloon' at the end of the loan agreement.
Therefore, if the vehicle is worth less than this you can return it to the finance company with with no further liability (subject to mileage and conditions). Alternatively, you can choose to pay the residual value and keep the car for yourself or sell on.
For more information on lease purchase or PCP please contact us
on 01473 259233
to speak to a member of the team.
*Please note that all of our financial services are subect to status, for more information please see our terms & conditions.