Business Contract Purchase

Business Contract Purchase

Contract Purchase agreements are most applicable if you are restricted in the amount of VAT which you are able to recover, or if you have a number of expensive vehicles. Contract Purchase is popular with companies purchasing executive type cars covering a low mileage (in excess of £25,000 each) You enter into an agreement for the vehicle for a fixed term at a fixed monthly rate.

At the end of this term you have the option to buy the vehicle, by making a final payment which you agreed at the beginning of the contract. You may return the vehicle to us and share in any profit derived from disposal. You will not however have any further payment to make if the vehicle returns less than the agreed "balloon" amount

The fixed monthly payment includes the purchase price, depreciation, mileage and the cost of any additional services you choose to include (maintenance, breakdown cover etc).

The benefits to your business:

1. Low initial outlay, typically equivalent to three monthly payments, optimising capital utilisation.
2. Fixed monthly costs, assisting with cash flow management.
3. The lowest purchase price due to our volume buying.
4. No exposure to disposal risk.

Considerations:

1. Not VAT efficient.
2. Cannot be shown 'off balance sheet'.
3. Not tax efficient in certain circumstances (lower priced vehicles).