How Lease Purchase Works
Lease purchase works like hire purchase with a balloon payment at the end. Part of the car’s cost is deferred to that final payment, so monthly payments are lower. Unlike PCP, the balloon isn’t optional: at the end you settle it, usually by paying it, refinancing it or selling the car. Lease purchase is popular for high-value cars that hold their value, where lenders are often comfortable with a larger balloon and there’s usually no mileage restriction.
Lease purchase in three steps
Step 01
Agree the balloon
Set a final payment based on the car’s expected value at the end of the term.
Step 02
Lower monthly payments
Pay a deposit, then monthly payments on the amount not deferred to the balloon.
Step 03
Settle the balloon
Pay it, refinance it, or sell the car and use the proceeds.
Is lease purchase right for you?
Why lease purchase suits high-value cars
- Lower monthly payments on supercars, luxury and classic cars
- Usually no mileage limit, depending on the lender
- Route to ownership: the car is yours once the balloon is paid
- Personal or business purchase
You must settle the balloon at the end. If the car is worth less than the balloon, you’ll need to cover the difference.
HP, PCP and lease purchase compared
| Hire purchase | PCP | Lease purchase | |
|---|---|---|---|
| Monthly payments | Highest, as you repay the full amount | Lower, as part of the cost is deferred | Lower, with a balloon at the end |
| Final payment | None, or a small option fee | Optional final payment (GFV) | Balloon payment, which you must settle |
| At the end | You own the car | Keep, return or part-exchange | Pay, refinance or sell to settle the balloon |
| Mileage limits | No | Yes, with excess mileage charges | Usually not, depending on the lender |
| Best for | Owning outright | Changing car every few years | High-value cars that hold their value |
Features vary by lender and agreement. We’ll explain the terms of any agreement before you sign.
Things to know about lease purchase
The balloon must be paid
Unlike PCP, you can’t simply hand the car back to clear the balloon.
Value risk
If the car is worth less than the balloon at the end, you’ll need to cover the shortfall.
Plan your exit
Decide early whether you’ll pay, refinance or sell, so the end of the agreement is straightforward.
Other ways to finance your car
Hire purchase (HP)
Fixed monthly payments, and the car is yours once the final payment is made.
Car hire purchase →
PCP
Lower monthly payments, with the choice to keep, return or part-exchange at the end.
PCP car finance →
Car equity release
Release cash from a car you already own, or refinance your current agreement.
Equity release →
Why drivers use Boost
Specialist lenders
We work with lenders who understand prestige, performance and older cars that mainstream lenders can be cautious about.
Any dealer, new or used
Franchised dealers, specialist independents and, with some lenders, private sellers. We deal with the seller for you.
Clear figures, fast
Deposit, monthly payment and any final payment set out clearly, with one point of contact from first call to collection.
Finance is subject to status and available to UK residents aged 18 and over. Boost Finance is a credit broker, not a lender.
Lease Purchase FAQs
What’s the difference between lease purchase and PCP?
Both lower monthly payments with a final payment. On PCP the final payment is optional and you can hand the car back. On lease purchase you must settle the balloon.
How big can the balloon be?
It depends on the car, its expected future value, the term and the lender. Cars that hold their value well can support a larger balloon.
Can I refinance the balloon?
Often, yes. Many customers refinance the balloon onto a new agreement if they want to keep the car.
Can I use lease purchase on a used or classic car?
Yes. Specialist lenders offer lease purchase on used prestige, supercar and classic cars.
Is lease purchase available to individuals?
Yes, from some lenders, as well as to limited companies, sole traders and partnerships.
Are you a lender?
No. Boost Finance is a credit broker, not a lender. Boost Asset Finance Ltd is an Appointed Representative of EFT Finance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 667290). We work with a panel of lenders to find the right finance for you.
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