Lease Purchase Explained
This is similar to Hire Purchase but has greater flexibility.
Cashflow Benefits
The initial deposit is normally expressed as monthly payments in advance and is much lower than traditional HP, and a final lump sum or balloon payment (sometimes called a residual value) is usually included. This has the effect of reducing the amount of the monthly payments, thereby aiding cashflow.
Tax Implications
The tax and financial benefits are the same as hire purchase, but the payments can be structured to suit a businesses particular cashflow needs.
Who Owns the Vehicle at the End of the Agreement ?
After making the balloon payment, ownership of the vehicle can be taken, or it can be part exchanged - using any surplus equity towards a deposit for a new vehicle.
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Lease Purchase