A Drivelease Lease Purchase contract is similar to a PCP in that the leasing company uses the retail value of the car to estimate a future value at the end of the contractual period based on its depreciation. This is commonly known as the residual value. You place an initial payment on the car upfront and then you make monthly payments on the difference between the retail value and the residual value. As a consequence, the more the vehicle holds its value’, the better the deal – meaning luxury, prestige and performance cars are often popular for lease purchase deals.
However, there is a fundamental difference between lease purchase and PCP. Whereas PCP gives you the option to buy the car outright at the end of the contractual period, with lease purchase you already have an agreement to buy the car. There is no return option.
Therefore at the end of the lease agreement, the customer must make a final balloon payment. This may be done through a cash payment or alternatively with additional finance or part exchanging the vehicle for a new model.
A typical lease purchase agreement will last from two-four years, though with most companies it is possible to settle the agreement at any point during the contract.