Contract Purchase
Contract purchase offers
all the operational benefits of Contract Hire - low capital investment, fixed
costs, no disposal risks (depreciation), no unexpected maintenance costs and very
minimal administration. However for accounting purposes it is a form of purchase
and therefore you get the option to either purchase the vehicle at the end of
the agreement at a pre agreed figure or return it to the leasing company. The
optional purchase figure is set at the start of the agreement.
Contract Purchase may also
be suitable where companies want their vehicles to show as assets on their balance
sheet or for companies who are unable to recover VAT as there is no Vat on the
finance element of a Contract Purchase agreement.
It is also easier to terminate
a Contract Purchase agreement during the contract and is therefore often more
attractive to private users.
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| Some
points to consider are: |
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Available
to business and private users |
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There is
an option to purchase |
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Any new
car or commercial vehicle available |
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Contracts
can be terminated at any time |
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Low monthly
payments |
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No large
deposit or final payment |
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No depreciation
risk |
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A brand
new vehicle of your choice and specification |
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Contracts
tailored to your needs |
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Servicing
can be included |
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Road tax
for first year only included |
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Vat on
total purchase price reclaimable for vehicles solely used for
business |
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Vehicles
show on balance sheet as assets |
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Any borrowings
show on balance sheet |
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Vat is
not applied to finance part of rental |
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Benefit
from economies of scale |
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Single
vehicle or complete fleet |
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Fixed costs
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Minimal
Admin required |
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