Car or van lease purchase is a good finance solution for business people who would like to own a vehicle but do not necessarily have the cash reserves to buy one immediately
Lease Purchase is another type of vehicle finance which is ideal for non VAT registered customers who eventually wish to take ownership
Lease Purchase (LP) is very similar to Hire Purchase, but with the addition of a larger final payment. This means that a proportion of a vehicle’s initial cost is deferred until the last month of the contract, therefore lowering the amount that is paid in the subsequent months of the agreement.
Under lease purchase van deals there is no option to return the vehicle. By entering into a Lease Purchase deal, you have already agreed to purchase the vehicle.
The best lease purchase car deals deliver most of these benefits. The vehicle is registered in the company name. lease purchase vans and cars appear on your comapny balance sheet. Fixed monthly payments not subject to VAT No mileage restriction Portion of initial cost deferred until last month of the contract.
It is a flexible product and it is possible to put down a larger initial payment, which has the advantage of reducing the monthly payments. The monthly cost is worked out on the difference between the retail value and the depreciation value: plus interest. This means that choosing Lease Purchase for a vehicle which holds its value will work out in your favour.
The main difference between Lease Purchase and Contract Purchase is that instead of having the choice at the end of the contract to purchase the vehicle, which you would have with Contract Purchase, you have already entered into a contract to purchase the vehicle at the end of the contract with Lease Purchase.
This contract is only for those who are absolutely sure that they want to take ownership of the vehicle at the end of the contractual period, and pay any balloon payments attached to the contract. Lease Purchase agreements typically last between 2 and 4 years although the agreement can be settled at any time throughout the contract.
Even the best cheap van lease purchase deal will turn out expensive if good care of the vehicle is ignored. You must ensure that the vehicle is always comprehensively insured. You must pay any additional charges that you incur for example a parking fine or congestion charge on time. If you don’t, the cost and/or fine will be issued to the finance company who will invoice this to you together with an administration charge that they will levy. You must have the vehicle serviced and maintained by a main franchised dealer in accordance with the manufacturer’s recommendations and keep it roadworthy. If you do not service and maintain the vehicle, the funder will make a charge when the vehicle is returned as this will affect its value. You may add a cost-effective maintenance package which will cover routine servicing, maintenance costs and tyres, subject to fair wear and tear plus breakdown assistance to enable easy budgeting and give you fixed cost motoring. If you include a maintenance package please note the funder may decline to settle any charges if the total mileage on the agreement is exceeded. Failure to make payments in full and on time may result in the contract being terminated and the vehicle repossesed. Only enter in to an agreement if you are comfortable with the financial commitment and terms.