Finance Lease

Ideal for funding the use of Vans and Pick Ups and now the funding option of choice for businesses needing cost effective funding for their Commercial Vehicles.

Payments are calculated on the purchase price of the vehicle and the estimated future value of the vehicle. This future value can then be used to create a final payment commonly known as a ‘balloon payment’ which reduces your monthly rentals. At the end of the contract period, the vehicle is sold and 98% of the sale proceeds are returned to you.

Finance Lease gives you a flexible funding option without the risk of excess charges from the finance company on mileage, ‘wear & tear’ or maintenance.

Many finance companies are pushing businesses to fund their vehicles on Contract Hire as it gives them a manageable fleet that has to be renewed every 2, 3 or 4 years. For many businesses managing the requirements of Contract Hire can be time consuming and expensive, particularly when the excess mileage bill hits them! Many small businesses have variable contracts that can take them either 100 miles down the road every day or just around the corner, it is very difficult to manage their mileage over a long term. If you over state your mileage you will pay more for the vehicle, if you understate your mileage you will pay a big fine at the end of the contract.  Finance Lease has no mileage limitations.

Finance Lease is also a tax efficient tool as it allows a business to write 100% of their rentals off against their taxable profit…..which means you pay less tax!

 

How does it work?

The vehicle is purchased by the Leasing Company and Leased to the client.

Monthly rentals are paid over a pre agreed term.

Rentals are lower than normal finance because the Leasing Co’s buy in bulk and therefore obtain a greater discounted price from the manufacturers.

Rentals can be lowered further to aid cash flow by using the future value of the vehicle. This is known as using a ‘balloon rental’ at the end of the contract. The ‘balloon rental’ is then paid by either selling or part exchanging the vehicle at the end of the contract or by extending the contract for a further 1 or 2 years dependant on the vehicles market value.

The client using the vehicle is and responsible for its maintenance.

Benefits of finance lease as agreed by accountants:

  • 100% tax deductible. Reduce your costs and get back from the government between 18% & 40% of your total payments (including your deposit).
  • Pay the VAT with your payments, not all up front at the start of the agreement.
  • If VAT registered, claim it all back, and if not registered offset it against your tax.
  • Fixed payments for the whole agreement.
  • Low deposits and low monthly payments.
  • No penalty charges for additional mileage or damage etc at the end of the agreement.

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