Contract PurchaseContract Purchase is the funding facility which gives you the option to own the vehicle at the end of the contract. Typically suited for higher value vehicles or companies who cannot re-claim VAT. As with Contract Hire you have the option of a maintenance contract. The payments do not attract VAT.
How Does it Work?
If your company is restricted to the amount of VAT it is able to reclaim, or you have several expensive (typically in excess of £25k) cars in your fleet, it may make financial sense to retain ownership of your vehicles.
Contract Purchase offers all the operational, managerial and administrative benefits of Contract Hire, together with the tax efficient benefits of ownership, such as the ability to claim capital allowances.
- Your company enters into a finance agreement for the vehicle for a pre-determined period at a fixed monthly rate.
- You have the option to buy the vehicle when the contract is up by making a final "balloon payment", agreed at the start of the term. Alternatively you can return the vehicle to the finance company with nothing more to pay. (subject to any excess mileage or damage to the vehicle)
- The single, fixed monthly payment takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.
- You can choose to include maintenance cover with full breakdown and recovery assistance, keeping the driver on the road without involving the company in complex or costly administration.
- Low initial payment, typically equal to 3 monthly finance payments.
- You retain the tax benefits of ownership throughout the contract, with the option to take full legal ownership at the end of the term.
- Removes disposal risk and protects you future profits.
- A maintenance inclusive contract will remove the inherent risks associated with running a vehicle.
- Your monthly outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
- Credit lines can be better utilised for investment in your core business.
- Peace of mind.