This is an enhanced form of Hire Purchase
The advantages include a low deposit and reduced monthly payments. This is possible because a balloon (or increased) payment, which is a percentage of the anticipated value of the car, is deferred until the end of the agreement.
A Checklist of the Main Benefits
- Available for both business and private users.
- If you choose an agreement structured with a balloon payment your monthly payments will be reduced as a large percentage of the balance owed on the car is deferred until the end of your agreement.
- Your initial capital outlay is reduced.
- The interest may be allowable against tax (business users).
- You could fund your car as an asset on your balance sheet (business users).
- You may be able to claim writing down allowances (business users).
- The finance element of your agreement is not subject to VAT.
Explore other Finance options explained by CompuCars