Lease purchase is a finance product popular with non-VAT registered companies that prefer to own their vehicles outright, but who may not wish to put money up front. Lease purchase may also suit VAT registered companies, although the VAT is only recoverable on a lease purchase agreement if the car is exclusively used for business purposes.
Lease purchase works in a similar way to contract purchase agreements. An initial deposit is put down and then monthly payments are made over a fixed term. The payments are based on the initial retail value of the car and the residual value of the car at the end of the contract.
With a contract purchase scheme you would have a number of options open to you at the end of the contract, including buying the car or handing it back. With a lease purchase agreement, you have already contractually agreed at the outset to purchase the car.
The final payment can be settled with cash or further finance can be arranged. Once all payments have been made the business acquires ownership of the car. It is worth noting that disposal and residual value risks with lease purchase agreements remain with you.
With a lease purchase agreement therefore the higher the likely residual value of the car, the lower the monthly payments are likely to be. Lease purchase is therefore ideally suited to Mercedes-Benz cars that hold their value well.
Lease purchase – Benefits to your business
- Low initial payments (usually equivalent to three months’ payment)
- Improved cash flow (retain money in your business)
- Capital allowances available (Car can appear on company balance sheet
and can be written down against taxable profits) - Ownership of vehicle (once final payment is made the car is yours)
- Affordable access to luxury and prestige vehicles
- VAT recoverable (if vehicle’s sole use is business related)
Business lease purchase – Call for a personalised quote
Lease purchase is not necessarily the right option for every business,. Call 0844 375 3263 for further information about this finance option and others that may better suit your requirements.
Browse our best Mercedes-Benz business contract hire and car leasing deals here.
Car funding is available for private motorists. For more information call 0844 375 3263 or see below for more information.
Personal contract hire (PCH)
Personal contract purchase (PCP)

