Personal Lease Purchase Explained
By DavidWhat is personal lease purchase
If you take out a lease purchase agreement on a new car, you agree from the outset that at the end of the contract, you will purchase the vehicle. It enables you to eventually buy a new car, without having to find the entire amount up front.
Where lease purchase differs is that it is a pure finance agreement. It does not include maintenance or any other added-value services, such as those offered with a PCP agreement.
NB: Nationwide Vehicle Contracts are specialists in Contract Hire and Personal Contract Hire agreements. While Personal Lease Purchase agreements are no longer available with Nationwide Vehicle Contracts, it is important that you review the benefits and exclusions of every lease contract to better understand which agreement is best suited to your needs.
How could it work for you?
As with many other leasing agreements, you will pay an initial deposit followed by a series of monthly payments, and then pay a ‘balloon payment’ at the end of the contract to own the vehicle. The monthly payments – over a period of two, three or four years, for example – are worked out using the retail value of the brand new vehicle, the length of contract and the estimated residual value of the vehicle at the end of the contract.
Lease purchase is often a popular option with people who know what vehicle they want to eventually purchase, but can’t access sufficient funds to pay for the new car outright upfront.
It is worth noting that personal contract hire is often more popular and common than personal lease purchase. This is because it offers more flexibility at the end of contract term than a personal lease purchase agreement.
If you’ve got further questions about which type of lease contract is best for you, take a look at the information we’ve provided on each of the different contracts. Alternatively, give our team a call on 0345 811 9595.
“Lease Purchase is a finance agreement that differs from other lease contracts. Unlike PCP which offers more flexibility at the end of term, it does not include maintenance or other added-value services, and you commit to buying the vehicle at the end of the contract.”
The key features of personal lease purchase
- Pure finance package – no maintenance packages or other services are included
- The vehicle is paid for via an initial deposit, low monthly payments and a final balloon payment at the end of the agreement
- The vehicle must be purchased at the end of the agreement – you agree to take ownership at the beginning of the contract
The key benefits of personal lease purchase
- Monthly payments are not subject to VAT
- You will own the vehicle once the final balloon payment has been made
- Low deposit and monthly payments, making budget planning easier
What happens at the end of the contract?
When your lease purchase agreement reaches the end of its term, you must take ownership of the vehicle. There is no option to return it. You’ll be required to pay the final balloon payment, and then the car will be yours. You will no longer have any obligations to the leasing company.
If you’re interested in taking out a lease on a brand new car, call one of our specialists on 0345 811 9595 for expert advice, or visit our Homepage to browse our wide range of available vehicles.
We also offer various leasing services to our customers, such as Used Car Leasing or In-Stock Leasing.
Guide Information
Originally published: 19th October 2015
Last updated: 12th August 2022
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