Lease Purchase Finance is a versatile form of car finance that combines elements of leasing and ownership. It allows you to drive the vehicle of your choice with lower monthly payments during the agreement term, and at the end, you have the option to purchase the car by making a final balloon payment. This option offers flexibility for those who are unsure whether they want to commit to ownership at the start but like having the possibility to buy the car outright at the end.
When you enter into a Lease Purchase agreement, your payments will be structured differently from more traditional finance options like Hire Purchase. Here’s what you can expect:
Initial Deposit: As with most car finance options, you’ll start by paying an upfront deposit. This reduces the amount you need to finance, and in turn, lowers your monthly payments.
Monthly Payments: Your monthly payments cover the cost of the car minus the deposit and the balloon payment. These payments are generally lower compared to Hire Purchase because the balloon payment (a large final payment) defers a portion of the vehicle's cost to the end of the agreement.
Balloon Payment: At the end of the Lease Purchase term, you’ll need to make a balloon payment if you want to take ownership of the car. This payment is agreed upon at the start of the contract and reflects the car’s anticipated value at the end of the term.
One of the key benefits of Lease Purchase Finance is its flexibility. You can tailor the agreement to fit your financial situation and preferences:
Unlike some other finance options like Personal Contract Purchase (PCP), Lease Purchase does not impose mileage limits. This is particularly beneficial if you anticipate driving your car extensively, as you won’t incur extra charges for exceeding mileage limits. Additionally, there are no penalties for wear and tear, as you would expect with a lease agreement, because the intention is that you will purchase the vehicle at the end of the term.
Yes, you can end a Lease Purchase agreement early if your circumstances change, or if you simply want to upgrade your vehicle before the term ends. The process involves:
This flexibility makes Lease Purchase an attractive option for those who may want to switch vehicles frequently while still having the option to own the car at the end of the agreement.
While both Lease Purchase and Hire Purchase involve making monthly payments towards owning a vehicle, the main difference lies in the payment structure. Lease Purchase has a lower monthly payment structure because of the deferred balloon payment at the end, whereas Hire Purchase spreads the entire cost of the vehicle (plus interest) evenly across the term with no large final payment.
The primary charge in a Lease Purchase agreement, aside from the deposit and monthly payments, is the balloon payment at the end of the term if you choose to buy the car. There are no hidden charges for mileage or wear and tear, unlike with leasing options like PCP.
Yes, you can end a Lease Purchase agreement early by paying off the remaining balance, including the balloon payment. You can either sell or trade in your vehicle, and any amount the vehicle is worth over the settlement figure can be used as a deposit on your next vehicle or given to you as cashback.
The above rates and monthly payments are an example only. The actual rate you will be offered by lenders could be lower or higher depending on your circumstances
Representative example: borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37.
*After completing the application, lenders will perform a "soft search" that will not affect your credit score. Should you get an offer of finance and wish to proceed, the lender will then perform a "hard search" of your credit file. Finance acceptance is not guaranteed, please click the following link for more information: Initial Disclosure Document
Chelcie RoweExcellent customer service. Friend, helpful and patient. Knowledgeable and reassuring. This company helped when nobody else could in regards to finance, and Leon was exemplary.
Celin RoisinKirsty has been an absolute star the entire way - even when we had to change car last minute, she had it sorted and kept me feeling confident and secure throughout the entire process! I would recommend her to anyone and whoever gets her as an advisor is so lucky!!!!
Andrew DeanReally smooth process, the guys were great from start to finish and couldn't be happier with my new car. Legends!
Dyan WalkerExcellent service. Ali was professional, attentive and extremely thorough. He explained everything clearly and was able to close the deal for me quickly. Initial contact was made on Saturday and by Monday everything was completed. 5* service.
Martin BallHello well had never brought a car this way before but was helped though the whole thing by great staff found a great car and within 24hours had a new car 5⭐ customer service
Toni SeraphinWas not expecting to be looking for another car so soon... and this was at no faulty of Happy motors... They handled the issue with my first car rapidly. Damian, Leon on the day of the bad event went above and beyond to rectify the issue and dealt with the dealership. This meant that Kirsty had to put up with me once again to find another car... and bless her understanding and patience again for dealing with me haha! I eventually found my car, and again Kirsty and happy motors were superb, quick and efficient fro. Auto trader add to the car being at my door... superb. I recommend this team to anyone and will spread their name far and wide.. and sorry to say Kirsty... I will definitely be back again without doubt or hesitation.
John Henry Oluebube MadukaI recently had the pleasure of working with Kirsty at Happy Motor Finance to secure financing for my new car, and I am beyond impressed with the service I received. From the moment we connected, Kirsty was incredibly knowledgeable, patient, and attentive to my needs. They took the time to explain all the financing options available to me, ensuring that I could make an informed decision.What stood out the most was their commitment to finding the best possible Car, rates and terms that fit my financial situation. Kristy navigated through the paperwork with ease, making the entire process smooth and stress-free. A couple of times I was feed up and wanted to give up but Kirsty reassured me that this will workout in the end. Thanks to Kirsty's expertise and dedication, I am able to drive away in my dream car with a financing plan that works for me. I highly recommend Kirsty from Happy Motor Finance to anyone looking for a reliable and supportive finance company and representative. Thank you, Kirsty, for your outstanding service! I appreciate You😊
Kane MillerThank you so much for the help and it was fast, easy and straightforward thank you Ali for the help if I could give you a 10 star I would 🌟⭐️
Hashem AhmedAs a seller, the whole process was absolutely professional and swift. Would highly recommend and definitely work with again!
Alex Timmins-JonesVery helpful and a personal touch. 99% of companies just click a button and leave you alone if rejected. Happy actually worked hard to understand my circumstances and make efforts to match. All completed in a couple of days start to finish. They obviously have a unique selection of finance companies on hand to support. Very happy with happy
