Funding Methods - Personal Contract Purchase

The individual can have the option to buy the vehicle without assuming any residual value risk.

How it Works:

Personal Contract Purchase is really a lease purchase agreement where the customer has the option at the end of the agreement to either return the vehicle or pay the agreed balloon payment and keep or sell the vehicle.

The balloon payment relates to the anticipated future value of the vehicle, the future value is based on the mileage set for the contract at the start.

Advantages:

Ø Low initial outlay.
Ø Customer has the option to either purchase or return the vehicle at the end of the contract.

Disadvantages:

Ø Personal Contract Plan is not as tax effective compared with Personal Contract Hire and is usually more expensive.

Summary:
Personal Contract Purchase is becoming more and more popular with employees, constantly looking at their tax liabilities in relation to company motor cars.