Operational and funding efficiency to purchase your fleet

GE Capital’s Contract Purchase solution combines the service and operational benefits of contract hire with the taxation treatment of outright purchase.

A Contract Purchase is a conditional sale agreement whereby you ultimately acquire title to a vehicle. Some features and benefits include:

• Efficient for vehicles with 100% first year allowances
• Efficient for VAT-restricted businesses
• No large cash outlays are required
• Full capital allowances can be claimed
• Fixed repayments mean accurate financial planning
• Residual risk on resale of the vehicle can be removed

How Contract Purchases work

In calculating the repayments, the vehicle’s residual value (future market value) is set as the final, “balloon” sum at the end of the contract. You then purchase the vehicle via a series of payments calculated according to the depreciated value. These monthly payments comprise the capital interest and service elements, and are based upon the VAT-inclusive cost of the vehicle. As such, there is no additional VAT applied to the payments.

After making the balloon payment, you have a choice of options:

• Guaranteed Buy Back Option: where an amount equal to the balloon payment can be guaranteed at the beginning of the agreement - thereby guaranteeing the vehicle’s residual value, removing all financial risk and injecting a key benefit of contract hire into what is essentially a purchase agreement
• Disposal Option: where GE Capital sells the vehicle on your behalf. We return the full sales proceeds to you after deduction of a sales agency fee - removing the administrative burden of vehicle disposal
• Purchase Option: where you simply keep the vehicle after making the balloon payment - thereby retaining all risks and rewards of ownership