Tel: 01634 687070

Hire Purchase With a Balloon


Hire Purchase with a Balloon (Lease Purchase), offers lower monthly payments than standard hire purchase, as a portion of the capital is deferred for repayment until the end of the agreement. At the end of the agreement you can either pay the remaining capital sum and take ownership of the car, you can re-finance the balloon, or you may sell or trade in the car, settling the balloon. The deferred balloon element of the agreement is calculated on the estimated future resale value of the car. Importantly, the balloon on a lease purchase agreement is NOT guaranteed as it is on a Personal Contract Purchase (PCP) agreement.

What are the benefits of Hire Purchase with a Balloon Payment? As with any leasing agreement there are some brilliant reasons to consider Hire Purchase with a Balloon. Although some of the other leasing opportunities tend to be more popular amongst Brits, the balloon payment at the end of the contract certainly offers flexibility and cheaper monthly instalments. Among others, the major benefits of this form of car leasing include:

  • Cheaper deposits
  • Typically, when you take out a lease deal incorporating a final balloon payment, you’ll tend to find deposits won’t set you back as much. This is because much of the expense will be added to the potential final payment.
  • Lower monthly payments
  • When arranging your car leasing contract, you’ll agree on fixed monthly instalments. These will be made on a monthly basis, stretching for the duration of the lease. Unlike a standard Hire Purchase contract though, adding a balloon payment will reduce the fixed payments you’ll be required to make.
  • Enjoy fixed interest rates
  • As with all forms of leasing, you’ll benefit from fixed interest rates. Therefore, you won’t have to play the guessing game of fluctuating interest rates, which could potentially set you back more for the duration of the contract agreement.
  • Drive a better car at affordable prices
  • When leasing there’s the opportunity to get behind the wheel of a vehicle you wouldn’t otherwise be able to afford. This is a clear benefit and means you’ll have access to a high spec car without the same level of repayments you’d expect.
  • Own the vehicle at the end
  • With other forms of leasing you’ll hand the vehicle back once the contract comes to a close. With the balloon payment this isn’t the case. Instead, you make a final instalment and own the vehicle. There’s also the opportunity to trade-in or sell the vehicle.
  • Leasing won’t affect your credit
  • Whilst a leasing company will check you have a sound credit rating, taking out an agreement won’t compromise your other forms of credit.
  • No VAT to pay for businesses
  • Many businesses choose to take out leasing agreements as they won’t have to pay the VAT costs. For vehicles solely used in business purposes, this is a 100% reduction.
  • What about excess mileage?
With car leasing agreements you’ll need to decide on an appropriate annual mileage. Typically, motorists drive between 12,000 and 14,000 miles each year. Calculate how many you travel accurately as there can be penalties for exceeding this pre-agreed limit. 


To find out more on a Hire Purchase with a Balloon agreement, simply get in touch with Autograph Contracts today, You’ll find some incredible deals on our website and will be able to arrange your own lease in no time at all. Call now on 01634 687070.


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