Car Leasing Companies and Contract Hire Companies in the UK

Finance Lease Contracts for Business

Finance Lease

Like contract hire, finance lease is ideal for VAT registered businesses whereas, the main difference with a finance lease agreement you take the responsibility of handling the administration and are in full control of asset, service, maintenance and repairs, end of contract disposal, and the vehicle cost is shown on your company’s balance sheet.

Finance lease is a VAT beneficial finance option as you can choose to pay the entire cost of the vehicle over the agreed contract period, or choose to pay a lower monthly rental costs and take a final balloon payment. This balloon payment is based on the contract period length, the mileage you are likely to cover during the finance lease contract. The balloon payment will be written in to your contract at the start, you often have the option to vary this amount if you wish, ask your broker to offer some suggestion to meet your monthly budget plan.

With finance lease agreements you must understand that you can never become the owner the vehicle (the asset) and you must dispose of the vehicle to a third party not connected with your business when you have agreed to finish the finance lease agreement with your provider, as annual extensions are available by paying a annual pepper corn rental (see more..). 

Finally, on disposal of the vehicle (the assest) you do own the monetary value of the vehicle (the asset), less any balloon payment outstanding to your lease provider and any final administration fees they charge. So, if you look after the vehicle well you may realise more monies than the balloon payment by far which will leave you with a cash surplus to use again for a new contract. Finance lease can really work for you but you must talk to you lease provider or broker so they can understand your precise business needs.

Finance lease is most popular for commercial vehicle funding and van leasing contracts.