Finance Lease

What is Finance Lease?

With a finance lease agreement you can choose to pay either the entire cost of the vehicle over an agreed period (usually 24 - 60 months) or you can lower your monthly rental with a guaranteed final payment which is in alignment with the anticipated final value (residual value).  Often this is referred to as the 'balloon payment". 

The vehicle remains owned by the funder and is only available to business users. 

How does it work?

The rental is calculated based on a number of factors, below are what you need to decide on in order for a rental to be calculated. 

• Vehicle you are interested in and any cost options. 
• Contract length you are comfortable with (24 - 60 months).
• Annual Mileage.
• Initial payment you have available.
• If you want to include a maintenance package. 

At the end of the contract you will need to sell the vehicle to a third party or settle the final payment and then continue to operate the vehicle by paying an annual 'peppercorn' rental. 

Key benefits.

• Popular for businesses when contract hire is not suitable. 
• Shows as 'on balance sheet' for the business.
• Fixed monthly costs, with the ability to take advantage of lower rentals by adding a final 'balloon' payment.  
• No mileage charges for damage or excess mileage, this will just affect the re-sale value and impact the amount you receive at point of sale. 
• Low initial outlay. 

Points to consider.

• You will not own the vehicle but receive between 95 - 98% of the sales proceeds when sold to a third party. 
• Interest rates are not always fixed so can expose you to fluctuating monthly rentals. 
• Road tax usually only included for first year.
• Responsible for the disposal of the vehicle.

If any of our guides haven't answered your questions please contact the team who will be happy to help Contact Us.