What are the advantages and disadvantages of lease purchase?
You should think carefully before entering into a lease purchase agreement because it is not necessarily the right method of car finance for everyone. Here are its advantages: • Luxury/prestige vehicles – Lease purchase is best suited to the finance of high-class vehicles due to the fact that you must take on the residual value. Higher residual values will also result in lower monthly payments. • Company asset – Lease purchase is ideal for companies that want to retain the vehicle as an asset. • Frees up finance – With lease purchase you take control of a vehicle while still holding money back to put into your company. Initial deposits are only usually the equivalent of three months’ payment. • Low monthly payments – Payments are typically cheaper than hire purchase and the same Consumer Credit Act protections apply. • Balance sheet – The vehicle can appear as a balance sheet item and you can write down the value against taxable profits. • Ownership – Once the balloon payment is made,
