Lease Purchase - The Benefits
Lease Purchase is sometimes referred to as Hire Purchase with a balloon and is structured in a similar way to Personal Contract Purchase (PCP).
The customer will normally benefit from a slightly lower finance rate with a Lease Purchase product as there is no guarantee offered at the end of the agreement, the deferred capital lump sum amount at the end of the agreement is known as the Residual Value (RV), and this has to be paid by the customer for outright ownership. Deposits for Lease Purchase are flexible and are normally a minimum of 10% and a maximum of 50% of the total vehicle price, repayment periods are taken over 3 or 4 years typically.
The Residual Value (RV) (sometimes called the balloon) at the end of the agreement reduces the regular monthly payments accordingly, thus making vehicles that traditionally have a strong Residual Value (RV) more suitable for this type of product as they make repayments far more affordable.
The Residual Values (RV) is calculated and set at the beginning of the agreement and although this is not payable until the end. At the end of the agreement, there are realistically two options, 1. Pay off the residual value in cash or settlement by part-exchange or 2. Some lenders will allow the residual value to be spread over a secondary period and be refinanced again.
Key Benefits to Personal Contract Purchase & Lease Purchase
- Lower deposits available.
- Cost effective rentals due to residual values.
- No tie to mileage contract.
- No lock in and settlement can be made at any stage of the agreement.
When you know the make & model of your chosen vehicle, simply complete our quick quote calculator to the left or alternatively, for a lease purchase quote, call us free on 0800 043 4340 or 01925 589020 to speak to a dedicated adviser.
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