What is Lease Purchase?
Lease Purchase is a hire purchase agreement provided by our Leasing Company regulated
by the Consumer Credit Act 1974.
This product is ideal for a Non-VAT registered organisations who want eventual ownership
of the vehicle. This is a dedicated funding product that does not include maintenance
or any other value added services.
Who owns the vehicle?
This product is an 'Ownership' style contract where the organisation is making payments
with the intension to purchase the vehicle at the end of the contract.
The Leasing Company owns the asset until all rentals including the final balloon
rental if applicable has been paid in full.
Is Lease Purchase subject to VAT?
Lease Purchase arrangements are treated for tax purposes as a purchase by the customer
when the vehicle is brought into use. As a result the writing down allowance is
claimed by the customer depending on the CO2 of the vehicle
Monthly payments are not subject to VAT.
If the agreement is for an LCV (commercial vehicle), then the full amount for the
VAT on the purchase must be paid in advance by the organisation. As this is a 'purchase'
agreement the organisation would then be able to reclaim this on their next VAT
return (subject to VAT status)
What is the initial outlay to you?
As the Leasing Company is underwriting an organisation or business user, the usual
profile is to pay three rentals in advance.
What Payment Options do you have with Lease Purchase?
There are 3 different Payment/Rental Profiles which support this product:
- Terminal Pause
If you take enter into a 36 month contract, you will normally pay 3 rentals in advance,
followed by 33 monthly rentals followed by 2 months where no rentals are due.
- Spread rentals
This payment profile results in a lower rental than 'terminal pause' but technically
the same length of contracts. If you take a 36 month contract, you will pay 3 rentals
in advance followed by 35 monthly rentals with the contract ending in month 36.
- Enhanced deposit
This is used when a customer has a part exchange and wishes to use this vehicle
towards a deposit. Should a customer take a 36 month contract, they will pay 1 rental
(should be no less than an equivalent 3 rentals) in advance followed by 35 monthly
rentals and the contract ends on month 36.
Can I have a Service & Maintenance on this contract?
No this contract does not come with a service and maintenance option, the customer
is fully responsible for adhering to the manufacture servicing schedules. Failure
to do so could invalid the Manufacturer’s warranty on the vehicle.
Does the Leasing Company insure the Contract Hire Vehicle?
No. It is your responsibility to insure the vehicle. Please see the Terms &
Conditions of the contract.
How often should a service be carried out on a Lease Purchase vehicle?
Services should be carried out as per the guidelines in the manufacturer's handbook.