What is Contract Purchase?

An alternative to Contract Hire, this product is ideal for companies who would like a high value vehicle and have the option to purchase the vehicle at the end of the contract but do not want any depreciation risks.

At the start of the contract the Leasing Company sets the Residual Value of the vehicle which is then guarantee. This gives you two options at the end of the contract:

Hand the vehicle back to the Leasing Company, if the value of the vehicle is less than the set Residual Value or you want no hassle in disposing of the vehicle

You may choose to pay the option to purchase fee and the final rental, the Leasing Company will transfer ownership of the vehicle to you. You may then keep the vehicle or sell it for use as a deposit for your next vehicle.

The vehicle is registered in the Lessor's name (Leasing Company). You can also enjoy the convenience of full maintenance at a fixed monthly cost. Road Fund Licence is provided for the full term of the contract.

Who owns the vehicle?

This product is an 'Ownership' style contract where you are making payments with an option to purchase the vehicle at the end of the contract. Should you take the maintenance option then this part of the payment would be subject to V.A.T at the prevailing rate.

How does the balloon option work?

How do you complete the sale at the end of the contract?

What is the Residual Value (RV) for?

At the start of the contract the leasing company will set the final payment for the vehicle which is guaranteed at the end of the contract. This gives you a number of options at the end of the contract:

Hand the vehicle back to the leasing company after the last regular payment is made.

You may choose to pay the option to purchase fee and the final rental, the leasing company will transfer ownership of the vehicle to you on receipt of payment. You may then keep the vehicle of sell it for use as a deposit for your next vehicle.

Re-Finance the final rental if applicable subject to credit. 28 days notice is required prior to contract expiry date.

Keep the vehicle for a further 12 months once the contract has expired and pay the rentals based on sliding scale of the balloon amount. Vehicle is not returnable once this informal period commences.

Is Contract Purchase subject to VAT?

The payments for depreciation and interest are not subject to VAT, whereas payments for services do attract VAT in the usual way.

Contract Purchase arrangements are treated for tax purposes as a purchase by the customer when the vehicle is brought into use. As a result writing down allowances can be claimed at the rates in force at the time.

What is the initial outlay to my Customer?

As the Leasing Company is underwriting a business user, the usual contract is three rentals in advance. However, in some circumstances if business is 'blue chip', one advance rental may be acceptable. Both of these options provide you with a low cash outlay for this type of contract.

What Payment Options does my Customer have with Contract Purchase?

There are 3 different Payment/Rental Profiles which support this product:

• Terminal Pause
  For a 36 month contract, you will pay 3 rentals in advance, followed by 33 monthly rentals that are then followed 2 months where no rentals are due up to the end of the contract.
• Spread rentals
  This is the usual payment profile resulting in a lower monthly rental than 'terminal pause' with the same length of contract. If you take a 36 month contract you will pay 3 rentals in advance followed by 35 monthly rentals, the contract ends in month 36.
• Enhanced deposit
  This is used when you want to put a lump sum down as an initial payment or have a part exchange you wish to use against a deposit; it has the effect of reducing the monthly rental. If you take out a 36 month contract, you will pay 1 rental (no less than an equivalent 3 rentals in advance) followed by 35 monthly rentals, the contract ends in month 36.

What services are available on a Maintenance Agreement for Contract Purchase?

Who do I call to arrange a service on my Contract Purchase Vehicle?

How often should a service be carried out on a Contract Purchase vehicle?

Your contract can include servicing, routine maintenance, unlimited tyres, exhausts and batteries.

Items excluded are glass and damaged items.

Arranging this is easy, we have a DriverLine telephone service where you can call to arrange the following:

• Service bookings with FREE collection and delivery including ‚'wash and vac'
• Breakdown and recovery services (Optional with a maintenance or non maintenance contract)
• Tyre replacement service with mobile fitting available
• MOT's
• Foreign travel documentation and advice

Services should be carried out as scheduled in the manufacturer's handbook, failure to follow could invalidate the vehicle manufacturers warranty.

Does the Leasing Company insure the Contract Purchase Vehicle?

No. It is your responsibility to insure the vehicle. Please see the Terms & Conditions of the contract.