Lease / Credit Purchase is structured in the same way as a Personal Contract Purchase (PCP) in that a capital lump sum amount, known in this instance as the Residual Value (RV), is deferred to the end of the agreement. The RV reduces the regular monthly payments and makes more expensive vehicles far more affordable.

Unlike PCP, Lease / Credit Purchase offers no option to return the vehicle to the finance company at the end of the contract. It is the customers responsibility to settle the final balloon payment either though additional finance, cash or settlement by part-exchange.

Lease Purchase repayment periods are typically taken over 2, 3 or 4 years and settlement can be made at any stage of the agreement. Customers will normally benefit from a slightly lower interest rate and has no tie to a mileage contract.

Credit Purchase repayment periods are restricted to 60 months (5 years) and so is only suitable for customers looking to take out finance over a long period of time although settlement can be made at any stage of the agreement. Customers will normally benefit from lower monthly payments due to the long contract period and has no tie to a mileage contract.

You need to be careful to avoid negative equity with a lease purchase agreement but can insure against this with GAP insurance.

Want to lower your monthly payment?
Within a Lease / Credit Purchase quote there are 3 things with which you can lower your monthly payment.

• Consider financing the car over a longer contract period – perhaps a 48 month contract will make your car of choice more affordable.
• The amount of deposit you are able to put down will dramatically effect your monthly payments.
• You can adjust the RV by setting a higher or lower annual mileage and, because you are not contracted to a certain annual mileage, this can be set at any level depending on how large you want the RV to be. Any adjustment in the RV will effect you monthly payments.