Contract Purchase Explained
This option is similar to Lease Purchase but with even greater flexibility. It is designed to give all the operational benefits of Contract Hire including maintenance, Road Fund Licence and relief vehicle, without the VAT implications of a lease. It therefore appeals to professions and businesses that are not VAT registered, and individuals who wish to opt out of their company car scheme.
Cashflow Benefits
The initial deposit is normally expressed as monthly payments in advance and is followed by fixed monthly payments; you know exactly what your monthly motoring costs will be.
Tax Implications
The tax and financial benefits are the same as Lease Purchase or Hire Purchase.
Who Owns the Vehicle at the End of the Agreement ?
The final balloon payment is a Guaranteed Future Value. You have the option of either taking ownership, disposing of the vehicle yourself (if you wish to take advantage of a profit opportunity) or simply returning the vehicle to the finance company.
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Contract Purchase