Contract Purchase provides the Customer with a car, which is purchased over a predetermined period and mileage at a fixed monthly rental; each monthly payment made contains a proportion of capital repayment and an interest element. Unlike Contract Hire it has a conditional sale agreement, which necessitates the customer contracting to purchase the vehicle at the end of its lease. Road Fund Licence and breakdown recovery are included and other ancillary products can be added such as Full Maintenance, Replacement vehicle, Accident Management & Fuel Cards.
What are the Benefits:
> Accurate Cash Flow forecasting from fixed payments
> Residual risk on resale of the vehicle can be removed
> Customer avoids sourcing vehicle
> Customer can own asset
> Customer reclaims VAT on services element of rental
> Customer claims Capital Allowances (CA) - Lower of £3000 and 25% of capital cost on a reducing balance basis.
> Interest cost allowable as tax deduction
Summary
Contract Purchase allows you to purchase the vehicle over an agreed period by paying a set monthly fee plus a final balloon payment. A full maintenance contract will prevent any unexpected repair costs and Customer has a variety of disposal options.
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Fleet Solutions
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