Hire Purchase/Lease Purchase
A straightforward repayment facility where you ultimately own the asset. Repayments can be structured in a flexible way using initial payments and/or a 'balloon' (final lump sum).
Key features and benefits
With ownership you have total control over the asset.
Ownership normally carries the potential for claiming writing down allowances and/or capital grants, including any enhanced first year allowances.
VAT on the cost of the asset is normally reclaimable*.
Fixed or variable interest rate - you make your own assessment and choose accordingly.
The interest element of repayments can normally be offset against taxable profit*.
The asset appears on your balance sheet.
Typical assets: virtually all types of equipment, vehicles, plant and machinery.
Balanced Payments Plan: The best of both worlds... you opt for a variable interest rate but with fixed repayments. So that when rates fluctuate, only the number of repayments varies but the amount stays the same, thus helping your administration and budgeting.
*Special rules apply to company cars.
Frequently asked questions:
What tax allowances can I claim?
You can normally claim writing down allowances on the cash price of the asset as shown in the agreement. The interest element of your repayments is usually allowable against taxable profit.
Can I reclaim VAT charged on the payments?
Providing you are registered for VAT, you can normally claim back the VAT payable purchase price of the asset. (Special rules apply to company cars).
What if the asset is lost, stolen, damaged or destroyed or becomes subject to a total loss claim during the period of the lease?
You are responsible for the asset and for any outstanding balance on the agreement. Comprehensive insurance, covering at least the full replacement cost of the asset is therefore vital.
Who is responsible for servicing and repair?
Unless you have servicing and maintenance built into your agreement, you are responsible for maintaining the asset in good condition. If you fit any replacement or additional parts to the asset, they become the property of Lombard until you take ownership of the asset.
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