Lease Purchase

An agreement to buy a vehicle usually by installments over the term agreed with a final payment (balloon) being made to acquire the title to the vehicle.

The balloon payment may be an estimation of the future resale value.

Title does not pass until all payments have been made, but tax and accountancy treatment assumes you have title from day one.

Benefits of Lease Purchase

Pure and simple purchase plan for a vehicle with flexibility by deferring part of the vehicle capital payment to the end.

Is shown as a company asset on your balance sheet thereby attracting standard capital allowances and interest is usually offset against Corporation Tax liabilities.

No VAT is payable on the repayments.

Things you need to know about Lease Purchase

The outstanding debt must also be shown on the balance sheet.

All vehicle running costs including the risks are yours.

There will be a charge if you return the vehicle early.