What is it?
This is a more flexible form of purchase agreement for business users only. The initial deposit and repayment periods can be structured to meet your requirements and budget. A final lump sum balloon payment option is available if you would rather make lower repayments throughout the agreement. The balloon payment is calculated on the anticipated value of the vehicle at the end of the agreement.
How does it work?
- Your dealer will structure the agreement to meet your requirements based on the vehicle, the agreement duration, your deposit and monthly budget
- After paying the deposit you make regular monthly payments, and any balloon payment, to repay the amount borrowed, plus any interest and fees
- The interest rate is fixed, which means you’ll know exactly how much you will repay throughout the term of the agreement
At the end, you have two options:
Retain the vehicle
Simply pay the balloon payment, and the vehicle is yours
Renew the vehicle
Choose another vehicle, using any equity towards your deposit
- Provides lower fixed monthly payments by offering the option of a balloon on the final repayment
- Can allow you to change the vehicle more frequently if you finance over a shorter term
- Payments are not subject to VAT since this type of agreement is a purchase plan
- There are no mileage restrictions
Other things you should know:
- The agreement is secured against the vehicle. If you do not keep up your repayments, we may take steps to recover the money owed, which may include repossession of the vehicle
- It is your responsibility to repay the balloon payment which means you take responsibility for any difference between the balloon payment and the value of the v
- The balloon payment is not optional and also attracts interest throughout the agreement
- You become the owner of the vehicle after making all required payments including the balloon payment
- Vehicle finance for business can be a complex subject. The right finance plan will depend on several factors including business status, cash flow, other borrowings and tax planning
- We strongly advise you seek professional help from the business expert at your local vehicle dealer or speak to a financial adviser
- Lease Purchase with a balloon is only available to limited companies, PLCs or limited liability partnerships on a non-regulated basis