Finance Lease is a hire product which gives businesses the flexible option of retaining the vehicle (for a small annual fee) at the end of the agreement. However, the customer may also sell the vehicle to a third party once all the rental payments have been made. The customer retains 100% of the sales proceeds (paid as a rebate of rentals).
HOW DOES FINANCE LEASE WORK?
1. You pay an initial deposit followed by a fixed number of monthly rentals over an agreed contract period.
2. There are two options at the end of term. You can choose a further ‘secondary’ lease of hire. Or you can dispose the vehicle on our behalf and keep 100% of the proceeds (paid as rebate of rentals). Any balloon taken will need to be settled at the end of the primary period.
BENEFITS OF FINANCE LEASE FOR YOUR BUSINESS
Fixed monthly payments for ease of budgeting
Lump sum or number of rentals as advance payment
Option to extend agreement into a ‘secondary’ period for a nominal annual fee (peppercorn rental)
Option to include a deferred sum/final ‘balloon’ payment to keep monthly costs low
Tax relief benefits the same as Contract Hire
50% VAT usually reclaimable of cars
100% VAT usually reclaimable on LCV’s
Reduced VAT paid by business, as monthly vehicle payments can be offset against taxable profits