Finance Lease
One of the keys to success for any type of business is always flexibility. If your business requires one or more vehicles but does not have the finance to purchase it out right, then finance lease is the answer. Finance lease has more freedom than hire purchase.
What is it and how does it work?
Finance lease is a VAT-free method of financing a vehicle. The monthly rental is determined by the initial cost of the vehicle, the period of lease and the residual value.
You will have full use of the vehicle during the lease period, although you never take ownership. At the end of the contract, a payment which is equal to the residual value will need to be paid. Usually this means that the vehicle is sold and a proportion of the proceeds from the sale is returned to the leasee. Alternatively you can choose to pay the entire cost of vehicle plus interest in monthly instalments. No excess mileage charges apply as you retain the risk and reward on residual value.
Why use Finance Lease?
· Security of fixed monthly payments
· Low monthly costs and initial outlay
· Flexibility - There are many different finance options to suit your budget and cash flow
· Always gain the latest vehicles
· Up to 50% of VAT payments can be reclaimed
· Finance lease is an on balance sheet method of funding
· You can boost equity by receiving a portion of the sale of the vehicle at the end of the contract
Who is a finance lease right for?
A finance lease removes the pressures of heavy initial outlays. It is a proven method of giving your business access to the latest vehicles without actually having to take ownership and buy them outright. There are also tax benefits too, which make this an ideal car finance method for many businesses
