Finance Options Explained: A Brief Guide To Available Finance Options

What is Lease Purchase/Hire Purchase with a Balloon?

Lease Purchase/Hire Purchase with a Balloon Payment are finance solution that allows businesses to drive MORE vehicle for their money.

Lease Purchase/Hire Purchase with a Balloon Payment is available on both New and Used Cars and Vans.

Like other finance agreements you choose the number of fixed monthly repayments (From 2 to 5 Years) and decide upon a deposit amount (VAT as a Minimum Deposit on Commercial Vehicles).  You have the choice to put down a larger initial payment to suit your circumstances.

Unlike other finance agreements, a Lease Purchase/Hire Purchase with a Balloon takes an agreed proportion of the vehicles value and defers it to the end of the agreement.  This is called a ‘Balloon Payment’.  This is the key to th agreements flexibility.

You pay your deposit, make your monthly repayments and at the end of the agreement you have two options. 

• You can pay the balloon and take full ownership of the vehicle.
• Alternatively, you can sell or part exchange the vehicle, using the equity difference between the vehicles market value and balloon payment as a deposit towards your next vehicle. (Please be mindful that there are many factors that can effect the vehicles market value – Such as: condition and mileage and service history – The liability of a shortfall between the market/sale value and the ‘Balloon Payment’ this would be your responsibility.)

For Business customers, Lease Purchase/Hire Purchase with a balloon are classed as a purchase agreement.  This means that the vehicle will show as an asset and can have its value written down along with other plant and machinery, and interest costs may be allowed as a business expense.

Lease Purchase/Hire Purchase with a balloon is quick, flexible and easy to arrange.

Benefits of Lease Purchase/Hire Purchase with a Balloon:

• Minimum Deposit of the VAT on the purchase cost of the vehicle - Additional deposits can be paid to reduce the monthly payments further
• Fixed Monthly Payments – Great for forecasting cash flow for your business
• Agreement Periods from 24 months (2 Years) up to 60 months (5 Years)
• No need for you or your business to be VAT Registered, however if your business is VAT       registered you can claim up to 100% of the VAT
• A manageable monthly payment with the option to take ownership of the vehicle at the end of the term (By making the final payment)

Concerns of Lease Purchase/Hire Purchase with a Balloon:

• Running Costs:  The running costs for the vehicle are your responsibility, Please take this into consideration when looking at Lease Purchase/Hire Purchase with a Balloon: Maintenance, Servicing and ‘Wear & Tear’ of the vehicle is your responsibility for the duration of the agreement.

Vehicle finance for businesses is a complex area and recommending the correct funding solution will depend on many factors including:

•        Business Status
•        Cash Flow
•        Other Borrowings
•        Vehicle Usage
•        Suitability and Affordability

To ensure you get the very best advice, you should seek professional guidance from your accountant or a Business Finance Specialist.

Any agreement for vehicle funding will be completed without advice and only based on your explicit instructions.

New Vehicle Solutions Ltd is authorised and regulated by the Financial Conduct Authority, our firm reference number for consumer credit is 685872 New Vehicle Solutions Ltd is an Appointed Representative of AutoProtect (MBI) Limited which is authorised and regulated by the Financial Conduct Authority for Insurance Mediation, their reference number is 312143. We are a credit broker and not a lender.

We are permitted to conduct Credit Brokering, Debt-Adjusting and Debt-Counselling in connection with the whole or partial settlement of credit agreements for vehicle finance and consumer hire agreements.

Company Registration Number: 8572112 – VAT Number: 166595858 Registered Office: New Vehicle Solutions Ltd, Tremains Road, Bridgend, CF311TZ

New Vehicle Solutions Limited does not and will not charge any fees for providing any Consumer Credit services. 

Some of our lenders may charge an administration fee to set up your agreement. 

Whichever lender we introduce you to, we will typically receive commission from them (either a fixed fee or a fixed percentage of the amount you borrow). The lenders we work with could pay commission at different rates. However, the amount of commission that we receive from a lender does not influence the amount that you pay to that lender under your credit agreement. Any renumeration amounts can be requested and disclosed prior to the conclusion of the transaction.

You can check this on the FCA Register by visiting the www.fca.org.uk or by contacting the FCA direct on 0300 500 8082

Calls may be recorded for training and monitoring purposes.

Last Update: 10/05/2021