Higher Purchase usually consists of the customer paying an initial deposit which can also be your part exchange, followed by an agreed period of monthly payments. Higher Purchase allows you to pay monthly instalments and own the vehicle outright at the end of the fixed term so the car is yours once your final monthly payment is paid plus any completion fee is paid!
Lease Purchase is similar to a higher purchase where you can pay a low deposit and then make the remaining payments at a fixed rate over an agreed period but a lease purchase consists of a final payment at the end of the fixed term known as a balloon payment.
Having a final payment (balloon) which is based on the vehicles estimated resale value at the end of the fixed term reduces your monthly payments significantly.
The car is yours at the end of the term once you pay the final (balloon) payment.
PCP is similar to Lease Purchase as the vehicle can be purchased based on agreed monthly payments with a final payment (balloon) but the balloon is a Guaranteed Future Value (GFV) which is set by the finance company.
The GFV is the minimum value you can expect your car to be worth at the end of the PCP agreement, provided it is within the agreed mileage and the vehicle is in a good general condition.
At the end of the fixed term agreement you can simple hand the vehicle back to the finance company if you wish or you have the option of paying the GFV balloon payment and own the vehicle.
Personal Leasing is an agreement between the finance company/main manufacturer and the customer. The vehicle is rented over the agreed period of time based on mileage restrictions. Unlike Lease Purchase and PCP, the customer doesn’t have the option of buying the car at the end of the term as the vehicle is handed back at the end of the term.
Rentals are subject to VAT and may include maintenance costs if wanted by customer. Charges apply for excessive mileage and condition of vehicle.
If you have any questions or would like any advice on your existing or next vehicle agreement then feel free to contact us on:
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