Outright Purchase

What is a Outright Purchase and how does it work ?

Speaks for itself. Or does it? Well yes and no! Yes if you have the cash and you definitely want to own the vehicle then this is the way to go. However why would anyone want to own a depreciating asset? Most people do not have the cash lying about to go and pay outright for a vehicle so they will probably borrow from their bank. The downside with this is that they have no protection under the consumer credit act as a loan is not directly linked to the vehicle.

 

The downside of this is that you take the full risk on what the vehicle is worth. Yes, you own the vehicle but it is a depreciating asset. Would you buy a house and expect it to lose a third of it's value in three years?

Key Benefits:

• No interest to pay
• Shown on balance sheet as an asset
• Writing down allowance
• Drawbacks
• Depreciating asset
• Disposal issues
• Risk on future value
• Ties up cashflow