Car Leasing Companies and Contract Hire Companies in the UK

Lease Purchase Contracts for Business

Lease purchase contracts were originally designed to assist non VAT registered businesses like the self empoyed, sole traders and partnership companies that are not incorporated, business users that wish to retain the full ownership of a vehicle at the end of the financial agreement or lease contract.

A lease purchase contract finance agreement is where the business acquires the full ownership of the vehicle once all of the lease payments, including any optional balloon payment has been made. Meaning that you have finally purchase the vehicle.

A “balloon payment” is a deferred amount from the original capital cost of the vehicle, and is repayable generally at the end of the lease purchase agreement. This deferred amount should equate to, or less than the maximum future value of the individual vehicle at the end of the agreed lease period.

It is important to undertsand that the future value of any vehicle is determined by many factors such as; popularity, age, registration plate suffix, condition, mileage, service history to name a few.

Talk to your car leasing company, leasing broker or dealer about adjusting any “balloon payment” you are offered if there would be any conditions that may lead to the vehicle not being in an acceptable condition at the end of your lease purchase agreement.

You may choose not to accept any “balloon payment” at all, or may wish to just reduce it to a smaller deferred amount, the choice is your’s - ask you car leasing broker. However, if you take this option you will be repaying more of the capital cost back through your monthly lease payment, so expect your monthly payment to increase to cover this.

To protect your vehicle from unexpected depreciation ensure that you look after it, make sure that it is in a safe condition to use, service it regularly inaccordence with the manufacturers service schedule. If the vehicle is a commercial van have it ply lined thoughout to protect it from any falling objects that my cause any out outward damage.      �