Contract Purchase is an alternative to Contract Hire for organisations that would like the option of taking ownership of the vehicle at the end of their agreement. Also, some VAT-restricted organisations prefer Contract Purchase as VAT is not charged on the monthly repayments, unlike Contract Hire; we, however, cannot recover VAT on the purchase of the vehicle, which increases costs.
As with Contract Hire, you finance the vehicle over an agreed term and mileage for a fixed monthly repayment. This reduces your initial outlay compared to purchasing a vehicle outright.
Based on the agreed term and mileage, we will set a final balloon payment based on the forecast value of the vehicle. At the end of the contract, you have the option of paying the balloon and taking ownership or simply return the vehicle to us: avoiding any residual value risk (so long as the vehicle does not exceed contract mileage and “Fair Wear & Tear” standards).
Contract Purchase agreements can be set up to includemaintenance, so your monthly payment can cover servicing, tyres, brakes and general maintenance costs with VAT charged and recoverable at on this part of the payment. Insurance and fuel are the only additional costs.
Replacement vehicles can also be included in the rental, or we can supply this on a pay-on-use basis.
Contract Purchase is another option that removes the risks of depreciation, interest rates, and maintenance costs but enables you to benefit from our fleet purchasing power on vehicles, parts and labour rates. Our management of maintenance spend together with our successful approach to re-marketing vehicles guarantees cost-effective, competitive pricing.
Benefits of Contract Purchase
Access to fleet discounts on vehicles, parts and labour
Minimum capital expenditure – invest in your business, not depreciating vehicles
Fixed interest rates
No VAT on monthly finance repayments (though we do not recover VAT on vehicle purchase)
No depreciation risk if you return the vehicle at contract expiry
No vehicle disposal issues
Ongoing advice and support
Road fund licence provided
Fixed maintenance costs
An optional replacement vehicle or pay-on use Short Term Rental
Technical expertise to control costs and keep your drivers mobile