Also known as a Lease Purchase, this product is probably the most widely understood given its popularity in end user finance.
How Does It Work?
The full value of the project is financed over your chosen term and you pay back both the capital and interest either monthly or quarterly. Public sector clients may also choose to do so annually.
Technically, this product is treated very much as a simple cash transaction from a tax perspective and has no advantages beyond using cash. Just like cash, the VAT is paid in full upfront and ownership transferred at the end of the term.
- Treated just like cash from a tax perspective
- Guaranteed ownership at the end
- Suits assets with high retained value (e.g. vehicles/plant & machinery)
- VAT has to be paid in full upfront