This method of funding is ideal for companies who cannot fully reclaim the VAT and is particularly suitable for financing the more expensive cars.

It was introduced to alleviate the burden on companies who were unable to reclaim the VAT on their monthly payments, and to overcome the cost of the Corporation Tax implications for cars costing over £12,000.

The Main difference between Contract Purchase and Contract Hire is that you have the opportunity to buy the vehicle at the end of the contract period. You will be faced with paying a 'balloon payment' at the end of the contract, you then become the legal owner or alternatively you can return the vehicle to THL.

If your company is restricted in the amount of VAT it is able to reclaim, or you have several expensive (typically in excess of £25k) cars in your fleet, it may make financial sense to retain ownership of your vehicles. This, however, exposes your business to all of the risks inherent in administering, maintaining and particularly disposing of a fleet.

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Contract Purchase offers all the operational, managerial and administrative benefits of Contract Hire, together with the tax-efficient benefits of ownership, such as the ability to claim capital allowances.

• Your company enters into a finance agreement for the vehicle for a pre-determined period at a fixed monthly rate.

• You have the option to buy the vehicle when the contract is up by making a final 'balloon' payment, agreed at the start of the term. Alternatively you can return the vehicle to us, with nothing further to pay, subject to return conditions being met.

• The single, fixed monthly payment takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.

• The majority of our customers choose to include maintenance cover, with full AA breakdown and recovery service.