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Finance Lease

What is Finance Lease?

A Finance Lease is a form of flexible leasing, usually used by business customers.

When taking out a Finance Lease agreement, you'll make an advance rental payment, which is typically the equivalent of three monthly rental payments, at the start. You'll then pay all of the remaining monthly rentals in line with the terms of the agreement. There is also an option to include a balloon payment at the end of the agreement, where a portion of the credit is repaid in a singular lump sum.

It is important to understand that you will never own the vehicle but at the end of the agreement you have two options:

  1. Sell the vehicle on behalf of the finance provider and receive a percentage of the sale proceeds
  2. Extend the term of the lease to enable continued use of the vehicle

A benefit of Finance Lease is that there will be no penalty charged at the end of the agreement for additional mileage or damage.

Also, if the company is VAT registered, between 50 percent and 100 percent of the VAT payments can be reclaimed depending on whether the company is renting a car or a commercial vehicle.

For a quotation, help, or advice contact your local dealership and ask to speak to one of our Business Managers. 

Is Finance Lease suitable for my business?

Finance Lease is suitable for business customers with smaller fleets. It may be difficult for businesses with larger fleets due to the re-sale of a large number of financed vehicles at the end of the agreement.

 

Who owns the vehicle with a Finance Lease agreement?

Throughout the Finance Lease, the finance provider will always own the vehicle and therefore you can only sell the vehicle on behalf of the finance provider once all repayments and charges have been paid and the finance provider has given their consent to sell the vehicle.

Can a Finance Lease agreement be terminated early?

The hire agreement can be terminated early but there may be early termination charges, these charges will be outlined in the hire agreement.

What information will I need to provide to apply for Finance Lease?

You'll need the following details and documents to apply:

  • Company details (including name, address, company reg. number and annual turnover)
  • Director details (including name, date of birth and marital status)
  • Business bank details (including bank name, account number and sort code)
  • Three months' recent bank statements (if the business has been trading for less than two years)
  • Management account (if the business has been trading for less than two years)
  • A Director's guarantee (if the business has been trading for less than two years)