Finance Lease Find Out More

What is Finance Leasing

• A way of paying lower monthly payments/instalments with a final payment that is based on the resale value of the vehicle at the end of the agreement.
• Very popular way of businesses and commercial customers to finance their vehicle where contract hire is not suitable.
• Fixed Payments throughout the initial agreement.
• When getting to the end of the agreement the vehicle may be sold to a third party or the business is able to pay the balloon payment (anticipated resale value) and continue to run the vehicle under a peppercorn rental agreement.
• Allows a business to have the assets show on their balance sheet.
• Allows businesses to acquire a commercial asset without a huge capital initial investment. From low initial deposits, flexible payments and taxable benefits, it allows businesses to not eat into capital funds which it may need for cash flow.
• There are not any high penalties for additional mileage at the end of the agreement which makes it more popular than contract hire.

Finance Lease working for businesses

At inception of a finance lease, a business’ usage parameters are agreed. Monthly payments and the term are fixed when these are met. A business can acquire a new vehicle with low upfront costs and monthly payments, with the asset showing on the balance sheet.

If the company is VAT registered, the company can claim 50-100% of the VAT Payments dependant on if it is a van or a car. If the company isn’t registered for VAT, the company can choose to spread the VAT across the payments for the duration of the agreement rather than the VAT upfront. A very popular way to finance a commercial vehicle today.