Contract Purchase: the ideal option for expensive cars

When it makes financial sense to retain ownership of your vehicles, but you still don't want to expose your business to risk, Contract Purchase may be the ideal solution for your company car fleet.

With a Contract Purchase agreement from Arnold Clark, you buy a vehicle over a pre-determined term by paying a fixed monthly amount plus a final 'balloon payment'. The monthly repayment and the 'balloon' are calculated based upon the expected mileage of the vehicle at the end of the term.

During the agreement, you can enjoy the same cost stability as you do with Contract Hire, particularly if you choose to include full maintenance cover. The asset will appear on your balance sheet, and you are entitled to claim capital allowances against depreciation. At the end of the agreement, you may complete the purchase of the vehicle by paying the final 'balloon' but you can also simply return the vehicle.

As Contract Purchase repayments only attract VAT on the services element of the contract, it can be a particularly attractive solution if your business is unable to fully reclaim VAT. It is also worth considering for the more expensive cars on your fleet.