what is lease purchase & how does it work? 

Lease purchase is an ownership agreement that allows you to use a vehicle for a fixed period of time whilst paying for it.

Lease purchase requires you to put down an initial deposit, this is usually the full vat followed by fixed monthly repayments with the option of a final payment (balloon). These repayments typically range between 24 and 60 months.

At the end of the contract or sooner, having paid all the payments including the option final payment (balloon) along with any option to purchase fee, you will own the vehicle.

what are the advantages of lease purchase?

• Vehicle ownership at the end of the contract
• You can lower the monthly payment by adding an optional final payment (Balloon)
• You can write down the capital cost of the van or utilise your annual investment allowance.
• Purchase cost and interest elements of the agreement may be Corporation Tax deductible.
• Fixed interest rates
• Early settlement of the agreement is possible
• Monthly payments are not subject to VAT
• No damage or excess mileage recharges at end of agreement

what are the disadvantages of lease purchase?

• You are liable for the full value of the vehicle
• there is no "hand back" option at the end of the contract
• The final payment (Balloon) can be large and would therefore need to be budgeted for
• For LCV (Light Commercial Vehicle) buyers the full amount of the VAT must be paid up front.
• Vehicle appears on you balance sheet
• You must have fully comprehensive insurance