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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 and Alternative Route Leasing are trading names of Hanborough Enterprises Ltd who is authorised and regulated by the Financial Conduct Authority for consumer credit activities and insurance distribution. Our Firm Reference Number is 631448. You can check this on the FCA Register by visiting www.fca.org.uk or by contacting the FCA direct on 0300 500 8082. We are an independent vehicle finance broker and we operate with a panel of carefully selected funders. We may receive commission and/or other benefits from the finance provider if you enter in to an agreement with them. 


Alternative Route’s trading address is 11 North Street, Portslade, Brighton, East Sussex BN41 1DH.


Hanborough Enterprises Ltd is a company registered in England no 07216831. Registered office Jamesons House, Compton Way, Witney, Oxfordshire OX28 3AB. VAT Registration Number 110 3005 02. Data Protection Licence Z264186X. We are a broker not a lender

Finance is subject to status. Pictures are for illustration only and may not be the exact model. Calls are recorded for training and quality purposes. Errors and Omissions Excepted.

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