Finance Leasing Manual - FLM30.14

Purchase option: option price

In an income-into-capital scheme the price at which the option may be exercised is designed to (after taking account of the effect of any actual rent payable by Borrower to Bank):

• provide Bank with a commercial interest return; however this element will be reduced because Bank doesn't pay tax on it; and

• repay the 'loan' - the amount Bank paid to Borrower for the asset at the outset (or which Bank paid to a third party for the asset where Borrower didn't previously own it).