Lease Purchase or Hire Purchase used to be the standard method of funding a vehicle purchase. Although different financial products are now available, Lease Purchase still has advantages for customers (particularly for those buying more expensive vehicles) including low monthly payments and APR, no mileage contract and the possibility of refinancing the residual value of the vehicle.
Lease Purchase is a great solution for non VAT registered companies who want to own the vehicle at the end of the contract term because monthly payments are not subject to VAT. This form of payment allows effective budgeting and supports a company’s cashflow, whilst the end balloon payment gives the customer the flexibility to re-finance or settle in full. Another possible advantage of this option for companies is that the vehicle will be registered in the company name allowing it to appear on the company’s balance sheet.
Although this option will be suitable for companies purchasing cars, when considering the purchase of an LCV (light commercial vehicle), you must bear in mind that the full amount of VAT on the purchase is payable upfront. Although this is reclaimable if you are a VAT registered company, for non-registered companies another finance option will be more suitable.
GWA is happy to give you the benefit of our knowledge and experience in the motor finance sector to ensure that you are buying the right product for you.