- Would you like the option to purchase the vehicle at the end of the agreement?
- Is the vehicle being paid for by the business?
- Are you looking at buying a car?
If the answer to the above is YES then Contract Purchase may be for you.
The company pays monthly payments and at the end of the purchase agreement (which can be between 2 and 4 years) you would have 3 options on what to do.
- The car can be purchased for a pre agreed value;
- The car can be handed back to the finance house with nothing further to pay as long as you keep within the contract mileage and look after the vehicle while in your care;
- You can part exchange the vehicle and once the finance has been cleared you can use any equity towards the deposit of your next car.
Main Features
The company can offset the finance interest charges against corporation tax, enabling a reduction in the true costs.
The vehicle can be depreciated in the business accounts by the Inland Revenue guidelines, enabling further tax efficiencies.
The vehicle is an asset to the business, which may help towards a company’s balance sheet.
The decision whether to buy the vehicle or to hand back can be left to the end of the purchase agreement, which offers flexibility in the business environment.
OSV tip: “It is easy to mistake this scheme with schemes where you can not simply hand the vehicle back and clarification should be sought"
 If you are a private client and like the above then why not look at Private Contract Purchase?
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