Contract Purchase

A simple way to purchase a fleet over a set period of time Contract Purchase Header

Contract purchase is a fleet funding solution that allows your company to purchase fleet vehicles over a set period of time, eliminating the large capital outlays associated with outright purchase.

 

HOW IT WORKS

First, you choose vehicles based on your budget, agree a lease period and a mileage limit for the duration of your lease. We then lease the vehicles to you for a set monthly fee, with a fixed payment up front, and a final balloon payment at the end of the contract. You can also take out a maintenance agreement with us for day to day repairs and servicing, which can be built into your monthly payments. The vehicles will become your property once you have paid all of your rental installments, plus your final balloon payment.

Throughout your leasing period, fleet vehicles appear on your balance sheet as a fixed asset with a lease creditor, and depreciate over the life of the agreement. They then have a residual value at the end of the contract.

As your fleet is a company asset, up to 18% of the vehicles' value is allowable each year against taxable profits for vehicles emitting 130gm/km or less. 

VAT on the purchase price cannot be reclaimed at the beginning of the agreement unless it can be proven that there is no private use on fleet vehicles. If you are VAT registered you can claim back 100% of VAT on any maintenance option.

 

THE BENEFITS

  • Fixed monthly payments allow for improved cashflow and easy budgeting during the contract period
  • No need to tie up all your capital at once
  • Own your own fleet, with minimised depreciation risks
  • Low initial outlay – typically just 6 months’ lease payments
  • Save time and money on administration with our full servicing & maintenance option
  • Take advantage of capital allowances on low emission vehicles
  • Reclaim VAT for business use only vehicles and maintenance costs
  • At the end of your lease period you can return the vehicle to us, rather than pay a final balloon payment, if purchasing is no longer in the interests of your company

 

 

Is Contract Purchase right for you?

Is Contract Purchase right for you?

Decide whether contract purchase is the right funding option for your business:

It may suit you if a large number of your fleet vehicles are business use only, in which case you can recover the full amount VAT at the start of the contract. It may also suit you if you wish to avoid tying up large amounts of capital by buying your fleet vehicles outright, or if you wish to reduce administration by outsourcing your fleet servicing & maintenance as part of acquiring new vehicles.

It may not suit you if you do not wish to own your own fleet outright, or if the vehicles are subject to some private use, which will prevent you from reclaiming VAT on the purchase price.

 

Take a look at our funding overview page for other options that may suit your business better or speak to one of our experienced fleet consultants on 0343 351 9073.

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