Lease Purchase

Lease Purchase (LP) is a type of car finance that combines elements of hire purchase and leasing. Instead you make monthly payments to pay off some of the capital borrowed and interest, but there is also a deferred final payment, or balloon payment, at the end of the agreement.

The balloon payment is usually calculated based on the estimated future value of the car.

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Benefits of LP finance
  • Lower monthly payments than a standard hire purchase agreement.
  • Flexibility to choose whether to buy the car at the end of the contract or refinance it.
  • You can choose the amount of the balloon payment, within the lender's criteria.
Drawbacks of LP finance
  • Balloon payment at the end of the contract must be paid regardless of market value
  • Lease Purchase agreements can be complex, so it's important to read the terms and conditions carefully before you sign up.
Who is LP finance suitable for?
  • Usually suited to higher value vehicles with proven strong residual values
  • Can often be used on much older vehicles where PCP or HP is not available

Overall, Lease Purchase can be a good option for people who want to drive a new or used car without having to pay for it upfront and want lower monthly payments than a standard hire purchase agreement. However, it’s important to be aware of the drawbacks, such as the balloon payment

More finance options

PCP<br>Personal Contract Purchase
Personal Contract Purchase
HP<br>Hire Purchase
Hire Purchase
LP<br>Lease Purchase
Lease Purchase
BP<br>Balanced Payments
Balanced Payments
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