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Contract Purchase

For companies with high-value cars who would like the option to purchase the vehicles, but don't want any depreciation risks. The customer acquires the vehicle by paying fixed monthly installments with the asset being shown on the company balance sheet, and can either retain ownership at the end of the contract or hand the vehicle back.

The benefits of Contract Purchase:

  • Low initial outlay
  • Eventual ownership
  • No residual risk
  • Interest charges claimable against tax
  • More capital to invest in your business
  • Flexible contract
  • Optional final payment
  • Rentals allowable against tax
  • Writing down allowance
  • Fixed monthly costs
  • No disposal problem
  • Optional maintenance package
  • Optional relief vehicle
  • Road fund license included for the full contract length

Please see attached chart which gives you an overview of product features. However please feel free to contact us to obtain further in depth information.

  Contract Hire Contract Purchase Hire/Lease Purchase Finance Lease PCH/PCP Outright Purchase
Accurate monthly budgeting X X X X X  
Improved cash flow X X X X X  
Low Deposit X X   X X  
Fixed interest rates X X X X X n/a
Capital allowances available   X X   n/a X
Ownership of vehicle   Optional X   Optional X
VAT recoverable on rentals X (1)     X (1)    
VAT recovered by lease company to reduce rental X     X    
No depreciation risks X X     X  
Note 1: Only 50% of the VAT relating to the finance element is recoverable if there is private use of the vehicle. If the vehicle is only used for business purposes 100% of the service element VAT is recoverable on contract hire only.

Running the Vehicle

  Contract Hire Contract Purchase Hire/Lease Purchase Finance Lease PCH/PCP Outright Purchase
Vehicle disposal X X     X  
Reduced administration X X Optional Optional X Optional
Road fund licence provided X X     X (2)  
Breakdown cover Optional Optional Optional Optional Optional Optional
Relief vehicle Optional Optional     Optional  
Fixed charge maintenance Optional Optional     Optional  
Payment Protection Optional Optional Optional Optional Optional  
VAT recoverable on services X X     X (2) X
Optional GAP insurance X X X X X  
Note 2: Road fund licence is provided for the first year only.