All information is provided only as a guide.
We cannot be held responsible for any changes in legislation.


LEASE PURCHASE

This offers the same benefits as Hire Purchase but is structured to give lower monthly repayments with an offset balloon payment at the end of the term. The vehicle can be sold to settle the outstanding balloon payment or, in some circumstances, the balloon can be re-financed.

• Lower initial deposit.

• Lower monthly repayment.

• Aids cash flow

Disadvantages

1. Lease Purchase finance rates are not always as competitive as Hire Purchase rates which reflects the greater risk to the finance company.

2. The balloon payment attracts an additional interest cost, which will increase the overall funding cost.

3. Should you need to dispose of the vehicle early, you may find the settlement higher than the sale value of the vehicle.

4. You are liable for the outstanding balloon payment and will be required to settle in full at the end of the term.

In Our Opinion

Many finance companies offer the Lease Purchase option as a low monthly payment scheme, and don’t make clear the implications: greater overall interest costs, less competitive rates and more often than not, balloon payments are calculated as high as possible to reduce the monthly payment. This may have an adverse effect should you need to settle the agreement early. Additionally, it introduces the risk that the balloon payment due is greater then the trade value of the vehicle at the end of the agreement.

Lease Purchase is, however, a useful product when realistically structured.

Please note, Eurovans has compiled this information simply to assist you in choosing the most suitable funding option. We cannot make the decision for you.
If you are unsure, you should take the advice of your financial adviser, or, in the
case of business customers, it is essential that you consult with your accountant.