The monthly rental in lease purchase is determined on the basis of the cost of the vehicle purchased, the period for which the vehicle has been taken, and the estimated future value of the vehicle dependant on the wear and tear or depreciation.
Lease purchase method is cheaper than the
hire purchase method of financing a car because of the lower repayments. The interest charges maybe compensated against the taxable profits to lowering the cost of financing the equipment with capital allowances available.
Maintenance packages are made available along with lease purchase deals. However, this is optional and borrowers are free to reject the options if they feel.
Contract period under lease purchase may extend to four years and enables borrowers to put off a certain proportion of the vehicle's value to the end of the agreement.
Businesses that are not registered under VAT have a more advantageous position as far as lease purchase contracts go. However, lease purchase will be available only if contracts are available.
Other methods of acquiring car loans:
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