Lease purchase an alternative to purchasing a van
In a recent post we discussed van leasing as a method of financing a van.
In this post we will take you through how lease purchase is different and the benefits it may have for you when considering your next vehicle.
Much like other forms of van financing at the outset finance purchase may seem like a mine field, with 100’s of companies offering 1000’s of deals, varying deposits, monthly payment options and different balloon/final payment details.
However you may be at the point where you require a van and the idea of ownership is high on your list.
So what are your options, moreover what is lease purchase:
Lease purchase is a form of conditional sale scheme.
Finance is spread over 24, 36, 48 months, at the end of the term you are required to make settle the balloon or final payment, The deferred sum (balloon payment) will be determined by the age and mileage of the van at the end of the agreement upon which time the van is yours.
Finance purchase consists of 3 parts:
- Monthly Payments
- Final payment/balloon
Who can apply for finance purchase?
Whether you are an individual, sole trader or limited company you can obtain a vehicle through finance purchase.
What’s the difference between an individual and limited company purchasing a van on finance purchase?
The only difference is VAT, business owners who claim VAT must pay the full VAT amount upfront, at the end of the agreement the deferred sum/balloon has to be made, this may be done through a cash payment or alternatively via a second finance agreement.
Benefits of lease finance
- Lower monthly payments due to deposits and final balloon payment
- Option to choose length of the finance agreement
- Deferring the balloon payment allows time to save to pay off the van at the end of the agreement
- Lower monthly repayments may allow you the flexibility to afford a higher spec van
Things to remember:
- There is no return option at the end of the agreement.
- You must have sufficient funds (or apply for a second finance agreement) to pay off the deferred sum.
- Depending on current market conditions, the value of the outstanding balloon payment may be higher than the actual market value of the van.