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Lease Purchase

Lease Purchase - Suitability explanation

Lease Purchase (LP) is very similar to Hire Purchase, but with the addition of a balloon payment. This means that a proportion of a business car’s initial cost is deferred until the last month of the contract, therefore lowering the monthly amount that has to be paid after you place the initial down-payment. The monthly payments are dependent on the difference between the price paid and residual value of the vehicle plus interest. This means that the deal gets better the more the car holds its value, making luxury cars more popular for long term deals. Lease Purchase suits businesses that want to retain their company car as an asset.

 LP may not be suitable for you in certain circumstances. For example:

  • There is no option to return the vehicle, however, by entering into a Lease Purchase deal, you have already agreed to buy the car.

Benefits of LP 

  • Vehicle is registered in the company name
  • It is on the balance sheet
  • Fixed monthly payments not subject to VAT
  • No mileage restriction
  • Portion of initial cost deferred until last month of the contract

Taking care of the vehicle  

  • You must ensure the vehicle is comprehensively insured at all times
  • You must pay any additional charges that you incur eg parking fine, congestion charge on time. If you don’t do this, the charge will be referred to the finance company who take payment from you for this and for an administration charge that they will make  
  • It is a condition of the manufacturer’s warranty that the vehicle is serviced and maintained in accordance with the manufacturer’s requirements. They recommended that you use the services of a main franchised dealer

Failure to make payments in full and on time may result in the contract being terminated and the vehicle repossesed. Only enter in to an agreement if you are comfortable with the financial commitment and terms.


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Alternative Route Finance Ltd is authorised and regulated by the Financial Conduct Authority for consumer credit activities and insurance mediation (Firm Reference Number 674315). You can check this on the FCA Register by visiting www.fca.org.uk or by contacting the FCA direct on 0300 500 8082. Alternative Route Finance Ltd is a Credit Broker not a Lender. Alternative Route Finance Ltd t/a Alternative Route Leasing work with a panel of lenders and we may receive a payment or benefit from the finance provider if you enter into an agreement with them.


Alternativeroutefinance.com, alternativeroutefinance.co.uk, onlinecontracthire.com, Alternative Route Leasing and Personal Car Leasing are trading names of Alternative Route Finance Limited, a company registered in England no. 3891807. Registered Office 11 North Street, Portslade, East Sussex, BN41 1DH. VAT Reg No. 768 6351 86. Data Protection Licence Z7368657.

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