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Trucks Contract Purchase Explained

Contract Purchase

All the benefits of Hire Purchase but with lower scheduled payment values and greater flexibility at the end of the contract. The key is a Guaranteed Future Value (FV) provision of the final balloon payment. The choice is yours, to either pay the balloon to take ownership of the truck, or return the vehicle to us and subject to certain return conditions, walk away owing nothing more.

Main Characteristics of Contract Purchase:

  • The vehicle is treated as "on balance sheet"
  • Guaranteed Future Value (FV) provision in place
  • Finance House legal title to the vehicle until all instalments have been paid together with payment of a "balloon" (the FV) at the end of the contract, after which the customer can take final ownership.
  • Full VAT amount payable at the outset

Main Benefits of Contract Purchase:

  • Regular monthly payments are kept low
  • You can reclaim the full VAT paid up front
  • You can claim writing down capital allowances, reducing your tax bill.
  • You can offset the interest element of the monthly payment against taxable profit.
  • Greater flexibility at the end of the agreement with the option to not make the final balloon payment and hand the vehicle back as per return conditions.
  • Known cash flow with repayments not subject to VAT
  • Product can be tailored to your operating environment by structuring the payments to your specific requirements.