Contract Purchase
Contract Purchase is very similar to Contract Hire but you also have the option to purchase the vehicle at the end of the contract for a pre-set amount. If not you simply return it to the funder.
What is Business Contract Purchase?
Contract Purchase is a great product if you are unsure from the outset if you wish to own the vehicle or not.
You can hand the vehicle back as you would with Contract Hire or purchase it for a predetermined amount, often referred to as a balloon payment.
How does it work?
With Contract Purchase you pay a fixed monthly payment for the agreed term of the chosen contract term, typically between 24 - 60 months.
At the end of the contract you return the vehicle to the funder or purchase it by settling the final balloon payment.
The rental is calculated based on a number of factors, below are what you need to decide on in order for a rental to be calculated.
- Vehicle you are interested in and any cost options.
- Contract length you are comfortable with (24 - 60 months).
- Annual Mileage.
- Initial payment you have available.
- If you want to include a maintenance package.
Key benefits.
- You have a guaranteed final balloon payment option which is agreed at the start of the contract.
- Low initial outlay.
- Flexible contract lengths available.
- Maintenance agreement can be added to the contract.
- Works well for high value vehicles because you can decide at the end if it's worth purchasing or not.
Points to consider.
- Not suitable if you want to change your vehicle more frequently, once in an agreement it can be costly to terminate.
- Road Tax normally only included for year one.
- Not easy to get out of the contract early.
- If you are sure you want to own it Hire Purchase is often cheaper.
At the end of the contract you have a number of options, please see our end of contract guide.
If any of our guides haven't answered your questions please contact the team who will be happy to help Contact Us.