Experts in Vehicle Leasing

contract purchase

contract purchase

A hybrid financing agreement to help your business reclaim VAT

Combine the operating and financial benefits of contract hire with the option to buy
 

Offering particular benefits to businesses that have difficulty reclaiming VAT, contract purchase brings many of the operating and financial benefits of contract hire but with the option to buy the vehicle at the end of the agreement with a balloon payment.

 

Key highlights include a fixed monthly cost and protection against depreciation

  • Low initial payment
  • Fixed monthly rental payments
  • Freeing up of capital
  • No risk over depreciation
  • Tax benefits of ownership
  • Improved cost efficiencies due to our economies of scale
  • Maintenance inclusive contracts will remove risk of escalating running costs
  • VAT payable only on maintenance element

 

How it works

Contract purchase is a conditional sale agreement with a balloon payment at the end of the contract if you choose to purchase the vehicle. This is made under a separate re-purchase agreement for a pre-determined price, removing the risk of depreciation. Alternatively the vehicle can be returned to us.

You can also choose to add on extra maintenance and tyre services under a separate agreement, along with other services such as road risk management, fuel management and daily rental services.

As with contract hire, it brings operational benefits including reduced administration, giving you the chance to focus on your everyday business.

As the vehicles are classed as being on balance sheet, they are eligible for capital allowances whilst you also benefit from only paying VAT on the maintenance element and not the depreciation or funding.