This type of agreement is a pure funding method of spreading the vehicle purchase value over an extended term. Initial payment requirements are usually lower than hire purchase and a proportion of the depreciation can be deferred by including a final balloon payment.

Benefits:

• Fixed monthly payments for the duration of the contract help planning ahead
• Initial payment requirements are generally low
• You can purchase the vehicle at the end of the contract
• A residual value can be included in the lease thereby reducing the monthly payments