Nationwide Vehicle Contracts - Business Contract Purchase
A guide to business contract purchase from Nationwide Vehicle Contracts. You can find the full guide here: http://www.nationwidevehiclecontracts.co.uk/guides/business-leasing/contract-purchase
Published on: Mar 3, 2016
Transcripts - Nationwide Vehicle Contracts - Business Contract Purchase
What is business contract purchase?
Contract purchase is a finance agreement for VAT registered
companies and businesses that want to own their vehicle but
want to avoid the risk of depreciating assets.
How does business contract purchase
A company chooses a brand new vehicle, pays an initial deposit
and then continues to pay for the car or van in fixed monthly
At the end of the contract, the company has the option to
purchase the vehicle at an agreed price.
How it could work for your business
• Contract purchase is ideal for businesses that like to run high
value vehicles and don’t want to have to worry about the risk
• If yours is a VAT registered company, you will not have to pay
VAT on the monthly finance payments
Is my company eligible?
Is my company eligible?
• Contract purchase is available to financially eligible limited
companies, partnerships and sole traders. Because of the VAT
benefits, it is a particularly popular option for VAT registered
• Contract hire and finance lease are often more popular and
common than contract purchase because they offer more
flexibility at then end of the contact term.
The key features of business contract
• A guaranteed residual value is agreed at the start of the contract
• Fixed monthly payments cover the rental of the vehicle plus any
• The monthly payments are calculated by considering the
- The cost of the vehicle
- The contract period
- Mileage allowance
- Agreed residual value to be paid at end of
• Vehicle tax provided for the first 12 months
The key benefits of contract purchase
• Low initial payment
• Fixed monthly payments
• Flexible terms to meet your companies requirements
• Finance company guarantees the resale value at the end of
• Maintenance and other value services can be included
• Value of the vehicle can be written down against taxable profits
• If your company is VAT registered you will not pay Vat on
monthly finance payments
Considerations for contract purchase
• At the end of the contract, you must decide whether to sell
the vehicle, return it to the finance provider or purchase the
vehicle at an agreed price
• Vehicle must be insured with full comprehensive cover
What happens at the end of the
At the end of the agreement customers do not have to purchase
the vehicle. There are three options at the end of the business
contract purchase agreement:
• Hand the vehicle back to the leasing company
• Pay the purchase fee and the final rental amount
• Refinance the final rental amount if applicable- subject to
Looking for further information?
Check out the full guide here:
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