A finance lease is a contract that allows you to pay for a vehicle over a set period of time at fixed, pre-determined rates. On a VW, this period is usually four years. The finance lease model does not provide ownership of the vehicle at the end, and while it is possible (via a circuitous process) to buy the van after the lease is over, it’s not generally a good choice if you want to keep the van, and it’s not possible to do a conversion on a finance lease.
Even though the agreement is over four years (on average), most customers will part-exchange the van back to us for a new vehicle before the three-year point. This way, you always have a van that’s always under warranty, and you get the tax and VAT benefits (if applicable). As such, it's worth nothing that all finance lease payments are plus VAT. If you’re VAT registered, you can claim the VAT back quarterly.
With a hire purchase (HP) agreement, you essentially pay the VAT as a deposit upfront. If you’re VAT registered, you can claim this back at your next VAT quarter. You then pay for the vehicle over 2-4 years. If you want to lower the monthly payments, then you can choose the option of a large final payment at the end of the agreement’s term.
Hire purchase allows you to own the vehicle once the contract is complete.
With either agreement, you have the option to add upgrades to your vehicle, such as leather seats, body kits, upgraded alloys wheels, etc., and spread the cost over your monthly payments.