Much like hire purchase, a lease purchase is a type of vehicle financing package with the ultimate goal of ownership. Want to find out more about lease purchasing? We’ll explain more:
At a glance
What is Lease Purchase?
Lease purchase is a van financing option for those looking to own a van, with terms similar to that of other vehicle leasing agreements.
Lease purchase requires you to put down an initial deposit, which 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 of the payments, including the optional final payment (balloon) along with any option to purchase fee, you will own the vehicle.
The Advantages of Lease Purchase
Structured much like a hire purchase, a lease purchase agreement has some unique advantages:
- Lower Payments: Thanks to the inclusion of a balloon payment and deposit, lease purchases typically come with lower monthly payments in comparison to other deals.
- Ownership: By far the biggest benefit of choosing a lease purchase is that the vehicle is yours at the end.
- VAT Deposit: VAT registered customers can claim back the full deposit.
- Fewer Restrictions: With the vehicle being intended to go in to your ownership at the end of the contract, a lease purchase comes with far fewer restrictions than a typical leasing deal.
- Tax Benefits: Lease purchase is a tax efficient finance option. To explore your options, give Vanzone a call.
The Disadvantages of Lease Purchase
Some of the disadvantages of lease purchase includes:
- High Final Costs: The size of balloon payment at the end of a lease purchase can vary, and tends to be costly depending on your contract.
- No Hand-Back: Lease purchases are intended to be used for vehicle ownership. As such, there is no possibility of a vehicle hand-back arrangement.
- Full Value Liability: With lease purchase, the buyer is liable for the full value of the vehicle. This can fluctuate depending on vehicle depreciation, and current market rates.