Lease Purchase

What is Lease Purchase?

Lease Purchase is a form of vehicle finance designed for non-VAT registered customers who plan to own the vehicle at the end of the agreement.

It works by spreading payments over a fixed term (typically 2–4 years), with a final balloon payment due at the end. Once this is paid, the vehicle becomes yours.

Monthly payments are calculated based on:

• The vehicle’s retail value

• Its predicted depreciation

• Interest charges
  You can also choose to pay a larger initial deposit to reduce the monthly cost.

This product is most cost-effective for vehicles that hold their value well.

Advantages of Lease Purchase

• Low upfront payment

• Fixed mileage contract

• Ideal for customers who want eventual ownership

• Effective budgeting with balloon payment structure

• Ownership is acquired once the balloon is paid

• Monthly payments are not subject to VAT

• Vehicle becomes a company asset

• Appears on your balance sheet and can be recorded against taxable profits

• Frees up cash for other areas of your business

Disadvantages to Consider

• The balloon payment must be paid at the end of the contract

• In some cases, the balloon may be higher than the vehicle’s residual value

• Lease Purchase does not include maintenance or additional services

• You must have fully comprehensive insurance for the duration of the contract

More Information on Lease Purchase

Unlike Contract Purchase – where you have the option to purchase the vehicle – Lease Purchase involves a commitment to buy at the end of the term. There is no hand-back option.

This funding method is best suited for individuals or businesses that are certain they want to own the vehicle at the end of the agreement and are prepared to pay the balloon in full.

Lease Purchase agreements typically run between 2 and 4 years, though you can settle the agreement early if required.