Lease Purchase is a method of purchasing a vehicle over a period of 12 to 60 months. The initial payment is usually low and is followed by regular fixed payments until the end of the agreement where you make a Final Payment (Balloon). The Balloon is worked out at the start of the agreement so you can budget for the amount. You must purchase the vehicle at the end of the agreement and there is no option to hand the vehicle back, meaning you take on any risk of depreciation.
Contract lengths range from 12 to 60 months
Allows for accurate budgeting over the term of the Lease
All of the VAT may be recoverable in the first year for vans, different for cars depending on use. Please ask your accountant to see if this applies to you
Vehicle is delivered to you and collected from you when you hand it back
Appears on Balance Sheet
You must purchase the vehicle at the end of the agreement; there is no option to hand back. However it may be possible to refinance the Final Payment (Balloon) and pay it off over a given period
Road Fund Licence only included for the first year
The Balloon can be high and must be paid