Business Lease Purchase

Business Lease Purchase

After paying an initial deposit, the balance of the purchase price is repaid by monthly payments and one final balance payment.  The agreement can be between one and four years sometimes five years, and when all the payments have been made you become the owner of the vehicle. This option may be appropriate if it is important to you to retain your vehicles as company assets.

There are a number of flexible options which enable you to increase the initial deposit to adjust the level of your monthly costs.

The benefits to your business:

1. You can also base the repayments on fixed or variable interest rates.
2. The vehicle is classified as a balance sheet asset which allows you to write down the value against your taxable profits.
3. The initial outlay is smaller than outright purchase and the spread throughout the term could helps you to manage cash flow.
4. Your vehicles are treated as a balance sheet asset, enabling you to claim capital allowances.
5. The interest on repayments can usually be offset against taxable profit.

Considerations:

1. You cannot recover the VAT on the purchase price of the vehicles.
2. All risks of ownership, maintenance, administration and disposal remain with you.
3. You may need to allow for the additional cost of providing internal or third party fleet administration.
4. You are committed to make a final payment.