Business contract purchase cars are another way of obtaining the vehicle your business needs. This is a type of finance agreement for business customers looking to fund a new vehicle in a manageable way.
In business contract purchase deals, the monthly payments are not subject to VAT. However, if you do take out the optional service packages that many business purchase contracts offer, then you will have to pay VAT on those service costs.
Contract purchase financing is ideal for any business that would like options at the end of its finance agreement. CP customers make an initial payment when they first take out the contract, then pay fixed monthly payments and finally have an Optional Final Payment (OFP) at the end at the end of the contract which is also referred to as the GFV (Guaranteed Future Value).
You can trade-in your vehicle at a dealership and take another vehicle from them. If the trade-in value is larger than the OFP you will be able to use the difference towards a deposit on a new Vehicle. Or, you can simply return the vehicle to the funder, as long as you have not exceeded the mileage and the vehicle is in an appropriate condition for its age there will be no charge. Finally, you can keep the vehicle either by paying the OFP in full or you will find that most companies offer the opportunity to re-finance the OFP.