Finance Lease

Also read: Hire Purchase | Lease Purchase | Operating Lease | Raising Capital

On a finance lease contract the finance company has full ownership of the assets and will rent the goods to you over a period of time. The finance company claims writing down allowances and then forwards the benefit to you by reducing the rental.Remember the purchase price is used to calculate the rental of the purchase price of the net of VAT. So if you are looking to obtain a VAT qualifying car and it is rented the rental is calculated on the net price of the car and not on the gross price.

Usually with a finance lease, you will find the supplier and after having paid the documentation fee and a multiple of rentals the remaining cost of the asset will be spread over an agreed period of time.

The rentals tempt VAT that can be regained subject to eligibility. As the finance company owns the asset there is no need to pay the purchase VAT at the beginning.

At the time of hire purchase you can add a balloon rental to bring down the primary rentals. When the agreement ends you will have the choice to enter into a secondary term. As you have covered the entire capital cost of the asset plus hire charges i.e. Interest in the initial period if you want to keep using the asset a lesser rental is charged. The rental amounts to 3% of the original cost and it will be a one off yearly payment.

As you do not own the asset you will not be able to sell the asset during the period of rental period. But if you are covering the total cost and the hire charges set within the initial period you will qualify for a share of the sale proceeds if the leasing company will allow you to sell on their behalf. The share of the proceeds is normally agreed at the beginning and is normally 95-99%.

Whats your next step:

You can either use our online enquiry form or
contact us direct for immediate human contact on 0800 0735353.
You are under no obligation and you pay no fees until the commercial finance product is arranged.