Lease purchase is a form of conditional sale agreement, which means that the regular payments are similar to a lease or rental agreement but you will own the vehicle at the end of the agreement.
You may be asked to pay a number of monthly payments at the start usually referred to as advance payments and a sum (balloon payment) is usually deferred to the end of the period. The deferred sum will be determined by the age and mileage at the end of the agreement.
What’s the difference between Lease Purchase and PCP?
The difference between a lease purchase and a PCP is that the deferred sum must be paid on a lease purchase agreement, whereas on a PCP it’s optional.
Is a Lease Purchase suitable for me?
A lease purchase may be suitable for the purchase of more expensive or premium cars.
Points to consider
Before deciding whether or not to go ahead with a lease purchase on a car, there are a few more factors worth considering first:
· You do not own the vehicle until the final payment has been made to include any administration fees.
· A portion of the credit for the vehicle is deferred until the end of the agreement, this will need to be settled if you want to own the vehicle outright and should be prepared for.
· Your vehicle is at risk of repossession if you do not maintain the payments as set out in the agreement.
· You must have fully comprehensive insurance for the vehicle.