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Finance lease

Finance Lease is usually used on commercial vehicles and vans when Contract Leasing / Hire is not suitable.

Similar to Contract Hire you pay a regular monthly rental. The amount of rental is decided by the purchase price of the vehicle and the pre-agreed disposal/ residual amount of the vehicle at the contract end after interest and depreciation amounts.

Advantages:

  • Low Capital outlays
  • Fixed monthly levels of expenditure
  • Vehicles are disposed of by the customer so no reconditioning charges are applicable
  • As with contract hire 50% of VAT on cars and 100% on commercial vehicles is reclaimable.
  • Fully inclusive service, maintenance and tyre packs can be added to the agreement

Disadvantages:

  • You can never directly own the vehicle at the end of the agreement as it must be disposed of by you to a 3rd party
  • On some contracts the interest rates can be variable

Additional Information on Finance Lease:

Although never the titled owner, at the end of the agreement you are responsible for a payment equivalent to the pre agreed residual value of the vehicle. Any profit or loss associated with this disposal is your responsibility.

Many finance lease agreements can offer a variety of payment options to suit any budgets. The regular monthly payment can be lowered further with an enhanced deposit or an end of contract balloon payment. Alternatively you can choose to pay the full cost of the lease off over a fixed period of time.

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