Guide to Vehicle Outright Purchase

What is outright purchase?

The outright purchase of a vehicle involves paying the full price upfront, without the need for a loan or finance.

The price of a new car or van that can be ordered from the factory or bought from pre-built physical stock piles is typically determined by the dealership you buy from.

It's a common method of acquiring a car as it's simple and removes the need for long-term payment commitments, which is ideal if you have the money available – but it’s not perfect. In our guide, we’ll cover the pros and cons of vehicle purchase, and compare outright purchase to other options available.

Pros of purchasing vehicles outright

Buying vehicles outright offers several benefits, particularly if ownership is important to you.

• Freedom - sell the vehicle anytime without needing to pay off outstanding loans.
• Maintain value - potential to resell at a higher-than-market value if vehicle upkeep is maintained.
• Pay less overall - although you have to pay the full purchase price, you won’t have to pay additional interest costs on top of this.

Additional benefits of car ownership for businesses

The big advantage that comes from buying a company car is the asset of ownership. The vehicle becomes an asset of the company and is treated as such, allowing you to sell if an employee leaves the business or even after a set period of time, recouping some of the money that was spent. As an asset, you'll also be able to claim capital allowances at the rate determined by HMRC and offset the depreciation against your taxable profits.

Cons of purchasing vehicles outright

There are some downsides to outright purchases, which will have the most impact on you if budgeting and costs are a primary consideration.

• Up front costs - new vehicle purchase costs mean you have to make a hefty payment in one go, which could have a significant impact on your savings and ability to spend money elsewhere.
• Depreciation - vehicle value depreciates over time, particularly in the first couple of years.
• Maintenance - as the owner, you must pay for all maintenance, repairs and MOTs.

Disadvantages of car ownership for businesses

Outright purchasing a car means that you have to pay the total cost of the car in one upfront payment. If you need to buy multiple vehicles, this could be an extremely pricey expense that isn’t going to be kind to your budget.
It's also important to speak to your accountant, as depending on the vehicle, it might not be the most tax or VAT-efficient option for your business.

Car lease vs outright purchase​

If outright purchasing won’t work for your circumstances, a lease plan could be a more suitable option to consider. Leasing a vehicle is one of the most cost-effective ways to drive a brand-new vehicle, without having to commit to ownership.

Understanding the main similarities and differences between leasing and purchasing will help you decide which route better suits your budget and needs.

Car finance options

There are several types of financing options available, and all involve spreading the cost of a vehicle over a few years - usually 2-5 years. Some plans allow you to take complete ownership at the end, while others offer the opportunity to return your lease vehicle and trade it in for a brand new vehicle on a new contract.

Business:

• Business Contract Hire - fixed-term and mileage-based business use agreement for the hire of a car or van for a set period.
• Contract Purchase - fixed-term and mileage-based agreement which gives you the option to purchase the vehicle at the end of the contract.
• Finance Lease - fixed-term rental agreement where the vehicle remains the property of the finance company and you have the use of the vehicle, usually a LCV (light commercial vehicle), but the resale risk sits with you.
• Operating Lease - mileage-based agreement for the hire of a car for a fixed term, with road tax only included for the first 12 months.

Personal:

• Personal Contract Hire - fixed-term and mileage-based personal use agreement for the hire of a car or van for a set period.
• PCP Car Finance - fixed-term and mileage-based agreement which gives you the option to purchase the vehicle at the end.
• Personal Operating Lease - mileage-based agreement for the hire of a car for a fixed term, with road tax only included for the first 12 months.
• Hire Purchase Agreement - spread the cost of the vehicle with a fixed rate of interest over a fixed term, and take ownership of the vehicle at the end.
• Lease Purchase - spread over a term at a fixed rate of interest but with the addition of a larger final payment, usually based on the expected value of the vehicle at the end of the agreement.

What to consider before committing to car ownership

It is important to remember that when you purchase a car, you are assuming the responsibility that comes with ownership of the vehicle. This includes organising and paying for insurance, maintenance and repairs on your own time and dime. 

Ultimately, the decision to go for an outright purchase or not depends on how long you intend to keep the car.

For example, company cars are usually more cost-effective over longer periods of time, so if you only need it for a few months, then it may be more financially sensible to consider daily rental or flexible short term car leases. 

If you’re interested in an outright purchase, contact our friendly team. Jurni can act as your agent to negotiate a good deal.

Discover affordable lease deals

At Jurni, we make leasing easy. We’re reimagining vehicle leasing with hassle-free contracts on brand new cars, vans, and minibuses for personal use and for businesses of all sizes. 

Whether you’re looking for a shiny new family car or seeking new additions to your commercial fleet, explore our special offers for the latest deals across a wide range of brand-new vehicles available to lease.