You could also agree a ‘balloon or end payment’ this would be made at the end of the agreement so that you can take ownership of the car or van, the point of doing this would be to make your monthly payments more affordable.
This is an agreement between the business user and the lease purchase company, All lease purchase agreements are subject to a credit search.
There are lots of finance options to choose from with lease purchase is NOT as popular as others, such as Finance Lease.
One of the main positives of lease purchase or HP, is the fact that the vehicle (asset) will be shown on your balance sheet – so giving you an asset that you can write down every year.
If you decide to take the ‘balloon/end payment’ route you would state your expected annual mileage, the lease purchase company then works out the expected ‘residual’ value of the car or van at the end of the agreement, the interest of the ‘loan’ is added to the cost of the car or van, your deposit is deducted, the ‘balloon/end payment’ is taken of then the remaining figure is divided equally between the amount of months you have decided to take the contract over, usually between 24 and 60.
If you are not taking the ‘balloon/end payment’ option the whole of the cost + interest – deposit is divided between the amount of months you have agreed to take the contract over.
At the end of the lease purchase period you would own the car or van. Should you wish to end the agreement early, you can sell or part exchange the car or van as providing the full settlement figure is paid. If you don’t sell the car or van for the outstanding amount, you will have to pay the shortfall.
So now you can see why lease purchase can also be an appealing method of funding.
Compare Lease Purchase quotes at www.leasebid.co.uk Compare Lease Purchase Offers
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