Contract Purchase
It is also an ideal method for financing the more expensive vehicle on the fleet i.e. those over £25,000. It offers the same operational benefits of Contract Hire with the main difference being that the vehicle is on the balance sheet.
The major difference between Contract Hire and Contract Purchase is the fact you have an option to buy the vehicle at the end of the contract. When you take out the contract there will be a final "balloon payment" option which will be agreed at the start of the contract. At the end of the contract you have a choice to pay this figure or simply hand the vehicle back to the finance company.
The key benefits of Contract Purchase to the business user are:
- Low Initial Deposit
- Fixed monthly payment
- Writing down allowance
- Interest charges can be offset against tax
- No risk on residual value
- Optional final payment
- No restriction on make or model
- Alternative credit line
