Finance Lease
Discover why Finance Lease continues to become a popular choice of funding whether it be a single vehicle or business fleet.
What Is Finance Lease?
Finance Lease also Is a form of funding for businesses needing cars and commercial vehicles. It provides tax advantages and overall flexibility to companies who are eligible.
Finance lease allows businesses to acquire new vehicles without making a capital investment allowing businesses to protect their cashflow. It is popular due to the tax advantages and flexibility available to businesses.
An agreed schedule of rentals including a final residual rental values essentially a long-term rental which allows an individual to drive a new car, usually covered by a manufacturer's warranty, for an agreed period of time for a fixed monthly fee.
Van leasing is becoming increasingly more popular as it gives drivers peace-of-mind by allowing them to pay a fixed monthly fee without having to worry about the depreciation value of the vehicle.
Van Leasing Deals
Click the button below to view our latet van leasing special offers.
Finance Lease Explained
Finance lease is specifically available to business customers a including limited companies, self employed and sole traders.
With a finance lease agreement, business customers can choose to pay low monthly rentals relative to the vehicle they are choosing to finance lease. At the end of the agreement, a final payment is due anticipated by the resale value of the vehicle. This is sometimes referred to as the ‘balloon’ payment. The final payment is payable although there are certain options business customers can take outlined further below.
With a finance lease on a new vehicle, business customers hire the vehicle for a specific term chosen and make regular monthly payments. This allows businesses to use the vehicle or fleet of vehicles without being hit with high up front costs. The vehicle or fleet of vehicles under finance lease will also sit on your company balance sheet.
Monthly payments are interest rate are fixed for the duration of the contract. If your company is VAT registered, you are also able to claim 50% and in some cases 100% of the VAT on monthly payments depending on the usage of the vehicle and if it is a car or commercial vehicle. Payments can normally be offset against taxable profits (different rules apply to cars).
At the end of the contract, the final payment is payable. As a customer on a finance lease agreement you have the option to sell the vehicle to an unrelated third party or pay the final payment and operate the vehicle under a peppercorn agreement. You also have the option to refinance the final payment.
Want to learn more? Speak to our experts today.
Benefits of Finance Lease
Fixed payments for the whole term
Popular to business customers
Low up front costs
Flexible payment structure
Tax advantages with 50% of the VAT claimable and in other cases 100% of the VAT claimable depending on usage and the type of vehicle (car/commercial).
Allows your business to handle the administration of your vehicles and show on your balance sheet as an asset
Pay lower monthly instalments with a final payment based on the resale value
No penalty charges for additional mileage or damage at the end of the agreement
Sell the car to an unrelated third party or pay the final payment and operate the vehicle under a peppercorn agreement
What happens at the end of the agreement?
The final payment is paid and the vehicle os operated under a peppercorn agreement
The vehicle is sold to an unrelated third party. You will benefit from any available equity if the vehicle is sold for a profit. In the event where the sale price is less than the estimated sale value (final payment), the difference will need to be covered by yourself.
We can provide a quotation to refinance the final payment on a new agreement (subject to credit approval).