Contract purchase is, in many ways, pretty much the same as a hire purchase agreement. However, at the end of a contract purchase plan, as well as being able to hand the vehicle back to us, you also have the option to purchase and own the car too.
For the duration of your contract you’ll pay a set monthly fee as you would with a contract hire agreement, but during the final month of your contract you’ll also be given the option of paying a ‘balloon payment’, which you can choose to pay in order to take ownership of the vehicle.
The cost of the balloon payment is determined when you take out your contract so you’ll always know how much it’ll be and, if you wish to buy the vehicle at the end, you’ll be able to budget throughout your contract so that you can afford to pay off the balloon.
The balloon payment is based on the residual value of the car. This will be worked out after taking into account the depreciation of the car, along with its mileage limit. Remember, it’s important to be honest with the leasing company about your mileage otherwise, at the end of your contract, your balloon payment could actually cost far more than the car is worth. Of course, should you choose to hand the vehicle back at the end of your agreement and you’ve gone over your mileage limit, you’ll also be hit with a costly penalty*.
Contract purchase is perfect for any company that wants high value vehicles as part of its fleet because while you have the option to purchase, you’re also free of the depreciation risk.
*Pence per mile charges vary depending on the vehicle manufacturer. However, they will always be highlighted before you sign your contract.
Email : firstname.lastname@example.org
Telephone : 01246 557080
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B&B Vehicle Contracts Limited
5A Fairfield Road
B&B Vehicle Contracts Limited are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 656300
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Registered Office : 5A Fairfield Road, Chesterfield, Derbyshire, S40 4TR
Disclaimer: All vehicle images and descriptions are for illustration and reference purposes only, all vehicle leases are subject to credit approval and subject to change at any time. E&OE.
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