Business lease purchase guide


Are you in a situation where you would like to buy a vehicle outright but don't have the finances immediately to do so? If the answer is yes, a business lease purchase is for you and provides an affordable solution to getting the vehicle you desire.

A lease purchase is available to VAT registered companies, businesses and individuals and shares many similarities to personal contract hire (PCP) but have some differences.

Road fund license is not normally included within a lease purchase agreement.

A finance lease is different to that of contract hire, as you have to pay a balloon payment at the end of your leasing agreement. This balloon payment pays off the finance company's investment. The balloon payment figure is agreed at the beginning of the contract and is dependant on whether you want higher or lower monthly payments during your contract term.

As mentioned before, a business lease purchase works similar to that of a personal contract purchase, where by the leasing company has a retail value of a vehicle and works out an estimated resale value of that vehicle at the end of the contract period based on its depreciation.

You, the customer would make an initial payment on the vehicle up front and then make monthly payments for the duration of the contract period.

The main difference between a business lease purchase and a personal contract purchase is that you have an agreement with the finance company to buy the vehicle at the end of the contract and therefore there is no option to return it when the contract comes to an end.

At the end of the contract term, you must make the final balloon payment to the finance company.

Like other finance products, a typical lease purchase agreement lasts for either 24, 36 or 48 months.
A business lease purchase is a cost-effective way of buying a vehicle outright when funds are not available immediately. The benefits of choosing a business lease purchase are:

Company asset
A business lease purchase is ideal for companies and businesses that want to retain the vehicle as an asset.

Balance sheet
The vehicle can appear on a balance sheet and the value of the vehicle can be written down against taxable profits.

Monthly payments
The monthly payments of a business lease purchase are normally cheaper than a hire purchase.

Frees up finance
A business lease purchase allows you to take control of a vehicle while still holding money in your business.

Ownership
At the end of the contract term and once the final balloon payment has been paid, the vehicle is owned by you.

Other business finance products you may be interested in are:

business contract purchase guide
Business contract hire is the most popular type of lease available in the UK.

Learn more

business contract purchase guide
Business contract purchase gives the customer the option to purchase the vehicle at the end of the contract.

Learn more

business operating leasing guide
A business operating lease is a cost-effective way of financing a vehicle for a business individual.

Learn more

business finance lease guide
A popular way of funding business commercial vehicles when contract hire is not a suitable option.

Learn more

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