Contract purchase is a fleet funding solution that allows your company to purchase vehicles over a set period of time, eliminating the large capital outlays associated outright purchase.
How it works
First, you choose the vehicles you want, based on your budget, and agree a mileage limit. We lease the vehicles to you for a fixed 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.
Your vehicles will appear on your balance sheet, associated with a lease creditor. The vehicle is then depreciated down to the agreed residual value over the term of the agreement.
As the vehicles are a company asset, 18% of the vehicle’s value is allowable each year against taxable profits.
If you are VAT registered you can claim back 100% of VAT on any maintenance options you take out with us. You can also claim back any VAT on the purchase price of vehicles, at the start of your agreement.
- 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 this equates to an amount equal to the VAT
- Save time and money on administration with our full servicing & maintenance options
- Reclaim VAT on purchase price of vehicles at the start of your agreement
- Reclaim VAT on maintenance and servicing options
- At the end of your agreement, return the vehicle to us rather than pay a final balloon payment if purchase is no longer in the interests of your company