Fixtures, fittings..

Personal contract purchase (PCP), may account for a greater percentage of new products sold under finance schemes and a moderate percentage of second-hand items – according to figures released by ‘FLA – Finance and Leasing Association’. The residual value of the purchase is calculated at the start of the agreement. Normally referred to as the, ‘guarenteed minimum future value’; monthly payments of which are spread over a 3 year period before a balloon payment to take ownership is made. Unlike lease purchases, return of purchases is possible, if its value on the open market, or that of its sector use has depricated by more than expected. The guarenteed minimum future value means there is no risk of negative equity..in cases where the accumulated cost of purchases and their use is to be valued at more than the final lump sum repayment this provides leverage; enabling settlement of debts and savings.

Fixtures, fittings..

Finance and Leasing

..final payment under a lease-purchase scheme is calculated when the buyer takes out the loan, and is based on assumptions about deprecation and usage. Usually affording the individual the option of selling their purchase, in order to settle the debt. If the depreciation is greater than predicted, however, the second-hand price may not cover the money outstanding.

There are no official figures for the number of items bought using lease purchase, although the loans are included in data for hire-purchase agreements. This is another sort of loan where a deposit is paid and monthly payments made until the debt is cleared. There is no final “balloon” payment.

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Finance and Leasing