Finance Products
Lease Purchase
Exploring finance options that blend the benefits of both leasing and ownership? Lease Purchase offers a unique solution that combines the flexibility of leasing with the opportunity to own your vehicle at the end of the agreement. Here’s an in-depth look at how Lease Purchase works and whether it’s the right fit for you.
What is Lease Purchase?
Lease Purchase is a conditional sale agreement where you make regular payments similar to a lease, but with on key difference – you commit to purchasing the vehicle at the end of the term. Unlike traditional leasing, where the vehicle is returned, Lease Purchase puts you on the path to full ownership.
How Does Lease Purchase Work?
A Lease Purchase agreement consists of three main stages:
- Deposit: You’ll typically pay an upfront deposit, often around 10% of the vehicle’s value. A larger deposit can reduce your monthly payments by lowering the amount you need to finance.
- Monthly Payments: After the deposit, you’ll make fixed monthly payments. These payments cover the use of the vehicle throughout the agreement term.
- Balloon Payment (Deferred Sum): At the end of the agreement, you must pay a large balloon payment to take ownership of the vehicle. The balloon payment reflects the vehicle’s projected value at the end of the term, influenced by factors such as age and mileage.
Unlike other finance options, like Personal Contract Purchase (PCP), Lease Purchase requires you to pay the balloon payment to own the vehicle outright.
End-of-Term Options
While Lease Purchase commits you to paying the balloon payment, there are still flexible options available:
- Refinance: If paying the balloon sum in full is difficult, you can refinance or extend the agreement to spread the cost.
- Sell the Vehicle: If you decide not to keep the vehicle, you can sell it and retain any equity gained from the sale.
The Benefits of Lease Purchase
Considerations of Lease Purchase
Lease Purchase strikes a balance between the flexibility of leasing and the commitment to ownership. If your goal is to eventually own your vehicle and you can manage the balloon payment, Lease Purchase offers a flexible and tailored solution for driving the car of your dreams.