What is business contract purchase?
Here at LeaseCar, contract purchase, or more specifically business contract purchase is one of our most popular types of leasing agreement. Contract purchase is similar in many ways to contract hire but it differs as you have the option of retaining your vehicle at the end of the contract period.
This type of leasing agreement is often very popular with companies who are looking to obtain a fleet of vehicles but who want to pay in a much more affordable manner than if they were paying upfront. The great thing about this type of contract is that the monthly payments are usually much more financially accommodating than other type of contract.
How does business contract purchase breakdown?
First of all there is the deposit, the company will put down a deposit on the fleet of vehicles as well as then financing the entire balance. Secondly, let's take a look at the time period which these types of agreements last for. Typically it is between 18 and 48 months but the most common timeframe which our business customers opt for is 36 months.
Generally speaking, the longer the time period, the lower the monthly fees will be. You should note that the longer agreements usually have the bonus a lower final payment, this is because you will have been paying more each month for a longer length of time.
One of the key elements of any business contract purchase agreement is the minimum future value aspect - this is one of the main reasons why many businesses tend to choose a contract purchase agreement in the first place. When you first contact us in order to apply for a business contract purchase agreement, we will predict the minimum value for your fleet of vehicles and what it will be come the end of the contract.
The initial deposit and monthly payments contribute to paying off the difference between the initial purchase price of the van and its predicted value come the end of the agreement, be it 18, 48, 36 or however many months were agreed during our initial meeting. The final value then needs to be paid of in order for the agreement to end, this can be done by returning the vehicle or by simply paying the outstanding amount.
We always make sure to guarantee that the actual value of your fleet of vehicles will be the same as the outstanding amount, although this is subject to some certain conditions. If you wish, you can give the fleet of vehicles back to us and the finance is then fully settled, even if the value of the fleet ends up being less that the outstanding amount.
Why are business attracted to business contract purchase?
Many businesses opt to take out business contract agreements when compared to other finance agreements because of the fact that they have to pay off a smaller amount of money. The lower deposit, and lower repayments all work to ensure that this type of agreement is extremely popular, especially with customers of ours here at LeaseCar.
Many businesses want to provide their staff with new vehicles every three years, this option allows them to do just that. Alternatively, they can keep their fleet if they are inclined to do so. Businesses are extremely attracted to the low monthly payments and the small deposit which allows them to free up funds for other areas of their operation.
Business contract period is a more attractive option than hire purchase to many because the cars will be much cheaper on a monthly basis, it's also possibly to actually own an expensive and luxury fleet of vehicles while never having owned the vehicles themselves.
Like all of our leasing agreements, business contract purchase allows our customers to choose from a wide range of high end and top quality vehicles which means you and your staff will be extremely satisfied with the vehicles that you choose. Its important to drive vehicles which impress not just your staff, but your clients or customers as well, giving your company a professional image whilst allowing you to drive a financially viable fleet.
Advantages of business contract purchase
- Payments made via fixed monthly installments
- Low initial payments
- Newer cars tend to be more efficient than older models
- There is a refinancing option on the balloon payment
- No worries about the cars depreciation if you decide to walk away from the contract at the end
- Initial low payments which allow access to great van models
- Maintenance and servicing options
- The finance company agrees a fixed resale with you before the signing of the contract
- You can return the vehicle when the contract is up
- It is a cost effective and hassle free option
What options do you have at the end of your business contract purchase agreement?
Once your company has reached the end of the business contract agreement, we will contact you explaining the details of the rest of the contract. We usually explain that the outstanding balance needs to be settled and there are then three options you could take:
Return the fleet
When you settle a business contract purchase agreement, we always guarantee that the value of the fleet will be equal to the final outstanding balance. This means you can simply return the fleet and end the agreement altogether. This can be done under certain conditions, such as you having not exceeded the agreed mileage and that the van is in good condition.
Pay the whole balance
You can either pay the outstanding balance in cash or simply refinance it. You have the option to keep the cars outright or just pay off the remaining balance until it then belongs to you.
Part exchange the fleet for more vehicle
If you choose a different vehicle, we are able to settle the finance plan that you're on. If the vehicles are worth more than the Guaranteed Minimum Future Value price that we agreed on, any left over money can be used to pay the deposit for your next vehicle.
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