Contract Hire and Leasing Specialists0845 296 4423
Broadly, personal contract purchase is the same as a personal contract hire agreement – but with one key difference.
At the end of the contract, there is an optional balloon payment that the individual can choose to pay in order to take ownership of the vehicle. This amount is determined at the outset and allows the driver to keep the vehicle if they are happy with it. However, it is not essential – on the contrary, as with a personal contract hire deal, you could choose to return the car to the leasing company and walk away.
Monthly payments are based on the difference between the retail value of the car and the residual value – i.e. the estimated future value of the vehicle after depreciation is taken into account. Therefore, the more the vehicle holds its value, the better your personal contract purchase deal will be as that will reduce your monthly payments.
A mileage limit will apply to all personal contract purchase deals. This is because the leasing company will use the mileage limit to determine the vehicle’s depreciation and therefore its residual value. So it’s important to be honest with the leasing company about how much travelling you are likely to do – exceeding the mileage limit will lead to penalties. Personal contract purchase is seen as a direct alternative to hire purchase and is subject to the protections set out in the Consumer Credit Act.
There are many advantages to personal contract purchase including:
Fixed prices – You know exactly what you have to pay each month, which can help you budget.
Initial down-payment – Only a small deposit is required.
Option to defer payments – If you include a balloon payment at the end of the term, you can defer payments.
Refinance – If you prefer, you can refinance the balloon payment at the end of the term.
Maintenance packages – Most personal contract purchase agreements will include maintenance packages that can range from basic servicing to total vehicle management.
No depreciation concerns – It’s not necessary to buy the car at the end of the term and so you can still choose to walk away without re-sale concerns.
Access to more ‘upmarket’ vehicles – One of the key elements of a personal contract purchase deal is that it gives you access to previously unaffordable vehicles due to the low deposit and low monthly payments.
There are very few disadvantages to a personal contract purchase deal but it is usually more expensive than hire purchase agreements. It’s also worth remembering that you will have to arrange comprehensive car insurance as the car will not be yours until the balloon payment is made.
At Days Contract Hire we have adopted a consultative approach to deliver and maintain cost effective, efficient service. We offer a wide range leasing options as well as a considerable amount of financing options. This ensures that you will be able to find the perfect, affordable service you require for your business.
Contact Days Contract Hire today and we will assign you a dedicated Account Executive who will always deal with you on your contract hire account. This will allow you to build a rapport and understanding which will be mutually beneficial to both parties. At Days Contract Hire we strive to provide only the highest quality contract hire service at affordable prices.
