Funding Methods - Contract Purchase

Funder assumes risk.
This is the only way for companies to buy vehicles without assuming any residual value risk. It involves a leasing company guaranteeing that the vehicle will achieve a pre-agreed value on disposal at the end of the contract.

How it Works:

The risk in the purchase is eliminated and monthly payments cover depreciation over a set period plus a funding charge, giving similar cashflow benefits to Contract Hire . The only difference in the payment cycle is that under Contract Purchase, the user pays the leasing company a lump sum at the end - and gets a cheque for the same amount back in the next post. This is a technical transfer of ownership.